Basic money management is about meeting your family’s everyday expenses, handling unexpected bills and saving for the future.
Money management can put you in control of your money, which helps you reduce stress and feel more secure. It lets you enjoy family life, rather than worrying about your finances.
A family budget is essential to managing your money.
That’s because a family budget helps you:
- spend your money wisely on the things you must have – these are your needs
- save money for the things you like, but can live without – these are your wants
- save money for your family’s future – for example, preparing for another child, buying a house or investing
- set aside money for unforeseen expenses – for example, if your car breaks down and needs repairs
- stop accidental overspending.
Working out how much money you need for everyday essentials like food, housing, utilities like gas, electricity, phone and water, transport and medical services can help you work out how much money you can set aside to cover unexpected expenses, save for the future and buy things you want.
Budgeting can help you and your family take the first step towards control of your money. It can also help you avoid debt.
Getting started with budgeting
The key to budgeting is sticking to a basic rule – spend less than you earn.
One way to start budgeting is to list the:
- money you have coming in
- things you spend money on
- things you owe money on.
It can help to look at past salary statements, benefit statements, bills, bank statements and credit card statements.
Try to look at enough bills and statements from the past year to understand your usual earning and spending habits. It’s good to look at how some bills are higher at different times of the year. For example, energy bills are often higher during winter because of heating.
Be sure to include all the ways that money is coming in and going out.
After you’ve accounted for essentials and emergencies, your aim is to have money left over to save and spend on things you want.
Working out what you spend: the first step towards managing money
One of the hardest things about making a budget and managing money can be keeping track of what you spend.
Spending items can include regular expenses and irregular or once-off expenses.
Here are some regular expenses you might want to include in your family’s budget:
- utilities – gas, electricity, water, phone and internet
- school fees
- health, car and household insurance
- transport costs – for example, public transport, petrol and tolls
- food and grocery items.
Here are some irregular or once-off expenses you might want to include in your family’s budget:
- dining out and takeaway food
- home maintenance and household goods
- school uniforms, textbooks and stationery
- medical and dental fees
- car repairs
- personal items like clothing and haircuts
- registration fees and equipment
- gifts – for example, for birthdays, weddings and other celebrations
- other things like special treats for you and your family.
If your income allows, deliberately overestimating the money you need for bills might help you find extra spending money.
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