Most young families cannot afford to live without a budget, especially when there’s a kid in the family. The budget doesn’t have to be too complicated. You can make one easily with clear goals that gives you a satisfying feeling of control over your financial future.
The following tips can help.
Take your time
Creating a first time budget can take a bit of time.
So, when you sit down with a pen and a paper, make sure you are fully into it for a few hours, otherwise, it might end up being pointless.
Gather all monetary information by digging into your papers, bills, taxes. You might have to skip a night of Netflix but that is going to be worth it.
Find out your incomes and expenditures
Note down all amounts of money that are coming in and going out (no matter how small the figure turns out to be).
Create another category – fixed or variable and mark them beside your incoming figures. Do the same for your expenses.
It’s better if you involve your partner into this job because there may always be something slipping out of your mind. But then, do not worry – even if you miss out on something, you can add it later.
EACH and EVERYTHING matters
When creating the incomes and expenses list, make sure you add everything. Even your birthday gift of 50$ matters. It can help you pay for the babysitter.
The same goes for your expenses. If you had a 3$ milkshake in the morning, put it on your list. 3 shakes a week counts to 9$, which is also roughly around 432$ a week.
Set a clear family objective and take it into account
Your family objective is essential the creation of your budget.
If your family aims to make your child a doctor or a tennis champion, it needs to be budgeted for. And if one of your children has special needs and you want to ensure his/her financial security for the future, that should be on the top of your priority list as well.
Create a plan to get rid of debts (if any)
Debts are a problem. The sooner you get rid of them, the better it is.
Keep a space on your budget for debt repayment – put in an amount that will not take away much from your lifestyle but will contribute a lot in refunding those debts.
Include life insurance, health insurance, tuition savings, and emergency money
It is important to have a vision for the future.
You have certain spending needs today which may certainly change over time. This is why it is a great idea to have a RESP for your kid’s college funds.
Also, consider having life and health insurance policies if you do not have one yet. In times of need it can save your family, in case something happens to you.
If you are starting a family young with financial limitations, an affordable Term Life Insurance policy can be a great choice for you. Otherwise, Permanent Life Insurance plans are the better option in the long run (if you have money to spare). An experienced financial advisor can help to assess your current situation, take your requirements and liabilities (if any) into account, and help you get the best life insurance policy in Mississauga, Toronto, Canada.
P.S. Don’t forget to have a separate emergency fund for the unknown. It is always better to be safe than sorry.
Now it’s the time for adjustment
Sum up your incomes and your expenses.
If you realize that you are spending more than what you are earning, you have to adjust a little (hint: variable expenses are the key here). Like, are you partying too much? Are you buying too many presents? Or is your mortgage too high? All these things are important and must be taken into consideration for adjustment.
Finally, we will say…
Be on top of your household finance. Go back to your budget when required and adjust it according to your wallet and life. After all, a budget doesn’t always have to be a restrictive one – it’s more like a guide that can help you amass wealth towards a brighter and safer financial future.