Name a parent who isn’t worried about their finances. It’s okay, we’ll wait.
Still struggling to think of someone who’s totally unconcerned about their family’s household budget? That’s what we thought. It doesn’t matter what kind of job you have or where you live, most people are stressed out about their finances. No one is exempt, including families taking home six-figure incomes!
Between your mortgage, credit cards, personal loans, car lease, and insurance, you’re probably spending a lot of money on just the necessities. And some of it may not be entirely yours, per se. With the average American household carrying around $134,058 in debt, plenty of people rely on lines of credit and personal loans to help out in an emergency.
Although worrying about your finances may be the new normal, it doesn’t feel good to stress over your weekly budget. If you’re sick of wondering how you can make ends meet, check in with this quick guide. It has practical tips to help you improve your family’s finances, so you don’t have to worry so much.
- Start using a budget: There’s no better accessory to your finances than the household budget. It helps you track your expenses, so you know how you spend your income. Once you tally your expenses, you’ll know how much you’ll need to spend on the necessities, including savings. Yes — those are an essential part of your monthly budget! Most financial experts suggest using a percentage budget to help you budget, devoting at least 10 percent of your income towards savings.
Cut expenses: With a budget, you’ll also see how much you spend on the non-essential items. These expenses are opportunities for savings if you notice you’re overspending in any category. You’ll want to target these areas and reduce how much you spend on things like takeout, entertainment, and subscriptions — then use these savings to pay off debts and set up an emergency fund.
You may be able to find additional savings in other areas of your budget, including the essentials like your grocery bill. The folks at MoneyKey created a simple guide on how to save money at the grocery store with practical tips that anyone can try — regardless of your diet or income. They include shopping for fruits and vegetables while in season and relying on tinned food when they aren’t. For more tips like these, you can get more grocery store savings by checking out their blog.
- Rank your debt: Knowing what you owe is an essential step towards managing your finances responsibly. If you’re using the percentage budget, most financial professionals recommend you cut enough of your expenses so that you can put 10 percent of your income towards:
- Debt repayment to pay off credit cards and online cash advances
- An emergency fund for unexpected bills or necessary repairs
- Fun savings for buying a new TV or going on vacation
- Your retirement plans.
Once you know how much of your income should go towards debt repayment, take the time to familiarize yourself with the terms and conditions of each debt. When you’re better informed about what you use, you can use the savings meant for debt repayment efficiently, prioritizing things like payday loans or credit cards. By focusing on these loans first, you’ll be able to avoid paying more interest than you have to.
- Stop paying late fees: It doesn’t matter why you miss a bill’s due date. Whether it’s by accident or because you don’t have enough to cover what you owe, missing a deadline is an unnecessary expense. Missing more than one bill could add to what you owe, and it might even affect your credit rating. You may be able to avoid these consequences by setting up automatic payments with your bank, so you’ll never forget to pay a bill again.
- Become a bill negotiator: If you don’t have the money you need to pay off your bills on time, you may be surprised to find out how far a little sweet talk may go. While some companies may be immune to your charms, others may be agreeable to deferring your bills. If they have such services set in place, they may be willing to reschedule your bills to fit your abilities.
You may even be able to discuss reducing your bills altogether, so it could be worth calling your creditors to see how far they’re willing to help you and your family. Raising a family is already stressful enough. You don’t need to make it any harder by throwing financial difficulties into the mix.
If you’re done with stressing over your family’s household budget, it’s time to put these tips into practice. They’ll help you address your debt and spend within your means — two of the biggest defences against financial stress!