Professional financial management and Home financial management are two distinct and different roles, and it is better to leave the latter to your better half. In most cases, she would do a better job.
Basically, like in all projects, the first step to avoiding financial debt is to create and maintain a monthly budget. It wouldn’t take much of your time and could be done on a holiday, once you have understood your spending pattern and needs that you can’t do without
So preferably, get yourself a laptop, a tablet, or a smart phone with an app that should suit you just fine.
Okay, let us get started
Make a list of all your monthly income and a list of all monthly expenses that come to mind.
When computing income, make sure to include all sources, be it part-time or full-time. Also, include any other financial support that you may be receiving, even areas such as monthly interest or even alimony, retirement benefits or child support.
While calculating expenses, be sure to include house-rent or mortgage, approximate food expenditure, utility costs (electricity, water, telephone, cable, house maintenance, gas etc.), transportation costs and other expenses that include eating out, entertainment, and mobile phones. You can easily lower that budget if you get solar panels installed by the solar panel supplier in Winnipeg.
Items that you purchase for you and your family should be listed separately as this could vary on a monthly basis. Most of these are luxury items and these can be controlled, so please do not list them as a monthly expense factor.
To monitor the exact expense factor, it would be good, if you could sit down, every night, for a month and list all the expenses for that day. At the end of the month, you would have a more accurate breakdown of expenses. Try also maintaining a file with all the expense receipts.
Now comes the easy part – At the end of the month, just check by how much does your expenses exceed your income. If the figure is small, then I don’t think you would have to do much of a balance, but if the difference is quite large, then it is time you cut down on spending.
The computer will be able to compute this and get the daily average on spending and income factor.
If it is a small discrepancy, you can reduce some minor expenses in areas like eating out, mobile costs or even entertainment costs. However, if the deficit is a large one, then you have to sit down and downsize some big spenders, such as transportation and petrol costs and utility areas.
Initially, it may seem difficult to limit spending and sticking to a budget. However, with a few changes you will soon realize that it will not only cut your spending, but you will also be saving more than you expect.
Firstly, try to alter your credit card spending pattern by paying cash whenever possible.
The advantage – You tend to avoid making a purchase unless you actually have the money available.
However, if you decide to make a credit card purchase, then be ready to clear the outstanding by the end of the month. This helps you save quite a bit of money by avoiding interest charges. If you already have a credit card, then transfer to a card with a low-interest rate and find a card that does not charge an annual fee.
Also, try to make the kids set an income and expense plan of their own – this makes budgeting a lot easier. Help them earn a bit and allow them to spend from their earnings. This does not mean doing anything indecent or getting involved in something shady. There are so many opportunities in the internet that they can avail of. Basically, teach them to spend wisely, while saving at the same time. It is better that they have independent bank accounts and teach them to use that. However, no credit cards.
If you are able to save, it can even free up extra money for things such as vacations or college funds for your children.
In addition, always have an emergency fund to hand to handle unforeseen expenses (accident or medical expenses). Also, you can add new categories such as debt reduction plans and even retirement savings as this category can damage your budget. In other words, try not to use credit.
There are several advantages to sticking to your budget and sticking to your financial goals, be it a vacation, or even a new car.
Don’t panic or think that good money management is some weird mathematical formula. The whole objective of a good budget is to make your money go the farthest in helping you reach your goals. It just is not there to force to you to abide by rules and your money management plan is always subject to change if your situation changes.
If your budget is a balanced one, in other words, your income just about covers all your expenses, then it is better that you start a saving plan. You can also add an additional income from your savings to your next month’s income budget.
Just remember that a budget can assist people in saving money and making their goals a reality.
With a budget and some little planning, you will be on your way to saving more money than you ever thought.