Financial Resource

Preparing a family budget and sticking to it is essential for every mom and dad to sleep soundly, knowing that the family home cannot be repossessed by credit companies. After all, if you can stick to your budget plan, you can successfully live within your means. You have enough income to pay your debts every month and have some left over for your future and for emergencies. However, if your debts start to spiral out of control, staying within your budget may not be so easy. But you must stick with it if you are to live debt free.

Budgeting is simple. Sticking to it can be hard but you have to make an effort to balance your available income with accumulated expenses if you are to avoid going into debt. I f you are already in debt, devising and following a workable budget is the best way to pay down your debts over time. Do this and you will be well on your way to living your life debt free.

Here are five tips to help you make a budget and stay debt free.

1. Include your objectives in your budget.

Figuring out why you want to budget is one of the best ways to stick to it. Maybe you need to reduce your debts? Or do you want to buy a new car in 12 months time? Then you will need to make specific accruals every month. Analyze all the things that you are aiming for beginning with the simplest and the short term goals. Think of the things that you need to accomplish for the next few months then continue with your longer term ones. Knowing your goals will help you plan a monthly budget to make certain you get them.

2. List out all of the family monthly expenses.

How much do you spend each month? Work out your fixed monthly expenses. These are the bills that you pay more or less with the same amount each and every month. These include your rent (or mortgage repayments) payment, car loans and monthly subscriptions such as cable, telephone, cell phone and internet bills. Allocate a portion of your money for these, and then allocate 5% more for unforeseen events.

3. Write down your extra-ordinary (unpredictable) expenses.

You should also keep track of those expenses that tend to vary, such as food, clothing, transportation and utility bills. You may be able to calculate a typical bill for these expenses and include that in your budget. Keep track of the amount of money you spend on other items too, such as a new set of spark plugs for your car or additional meals out with friends, wedding presents etc. Some of these expenses may actually be unnecessary, in which case, stop spending on them and cut them from your budget. Consider changing your mobile phone tariff from subscription to prepaid. Conserve energy, electricity and water to reduce your utility expenses, Spend only on items that you need.

4. Plan for your annual, semi-annual and quarterly expenses.

Usually, these are insurance premiums, membership fees or payment for magazine subscriptions that you have applied for. When trying to get out of debt, cutting unnecessary expense is crucial so weigh up these things to see is they are all really essential. After all, if you do not go to the gym, admit it and cut the subscription. This will free up some more income which can be allocated to credit card debt, or other bills, or even saved!

5. Follow your plan

Stick with your budget for three months. This is long enough for you to get a feel of whether it is working for you, and where changes can, and must be made. Have you made inroads into your debt for example? Compare your actual expenditure with your budget every month to make sure you do not overspend on any area.

Living within your budget is not impossible, although it may be difficult at first. But always keep focused on the big picture. Get the family involved so that no-one accidentally overspends. Living within your means may be unfashionable but it is never a waste of time. After all, you’re actually securing your own and your family’s future.

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