A money plan is called a budget and it is vital to get us to our desired financial goals. Without a plan it is easy to drift without direction. A budget should never be a financial starvation diet – it just won’t work. A family budget is your essential financial planning tool. By finding out where your money goes you can adjust the way you handle it, achieve your goals and be better off.
Here are ten general approaches that are helpful in assisting families to set up a budget or to budget better.
- The first important step is to change the way you think about money: alter your attitude about spending, focus on saving money and plan ahead.
- Be aware of how advertisers and others entice you to spend your money. Become familiar with your own spending habits, what temptation you react to, and where the areas of risk and exposure are.
- Delay purchases – save for them or learn to do without! Borrowing to pay for something is usually much more expensive than saving up for it first.
- Set solid financial and budgeting goals for yourself and your family. Include your family in the process so that you can work on an individual basis and also together to achieve your goals.
- Avoid playing the “Keeping-up-with-the-Jones’s game”. This can lead you to living with a false sense of wealth and security while over-extending yourself and financial resources, often beyond your means. Envy of others can get you deeper into debt just to compete or keep up appearances. And something you may not know is that the “Jones’s” may have borrowed to get what they have!
- Develop a greater awareness of how you earn, manage, save and spend money.
- Understand your income – know where the money is coming from and how it may vary throughout the year.
- Be aware of your expenses – the monthly, the irregular and the unexpected.
- Set spending limits and stick to them. Allow yourself some pocket money.
- Plan your obligations and remember those bills and expenses that come annually as well. Look for ways to economize on the necessities.
- Use your money plan to make sure that you have the opportunity to do the best you can with what you have. Set your budget and be moneywise – your family budget is one of the major steps to a successful financial future.
About Author: Lyn Bell has been in the finance industry for more than 30 years and is a Certified Financial Planner. In her role as Financial Planner Lyn has helped many achieve the lifestyle of their choice. Arts and crafts, cooking and knitting are among her hobbies.