As interest rates start to climb and living costs rise, budgeting the family expenses has become a really important topic with our wealth management clients in Perth with budgeting being a key financial management tool.
Although it is not for all families it can be an essential aspect of financial management that can help achieve financial stability and security and involves creating a plan that outlines how much money a family will earn, how much they will spend, and the impact of what’s left over on your future life.
Managing a family budget can require discipline, commitment, and for those serious about it the willingness to make necessary adjustments. Here are some tips to help families develop a successful budget plan:
Determine Your Income and Expenses
The first step in creating a family budget is to determine your total monthly income and expenses. This includes all types of income, such as salaries, wages, and any other sources of income. On the expense side, consider fixed expenses such as rent/mortgage payments, car payments, utility bills, insurance premiums, and other expenses that are essential to maintaining your standard of living. Then, consider variable expenses like groceries, entertainment, dining out, and other discretionary spending.
Set Goals
Once you have determined your income and expenses, set financial goals for your family. Identify your short-term and long-term financial goals, such as saving for a deposit on a house, building an emergency fund, or paying off debt.
Prioritise Your Spending
With a list of expenses, you can now prioritize your spending. It’s essential to allocate your money to the most important expenses first. For example, your rent/mortgage payment should take priority over a shopping spree. When prioritizing your spending, focus on your needs before your wants. This will help ensure that you have enough money to cover essential expenses and will prevent overspending.
Track Your Spending
Tracking your spending is critical to managing your family budget. It will help you identify areas where you can cut back and make necessary adjustments to meet your financial goals. Tracking your spending can be done manually with pen and paper or by using budgeting software or mobile apps.
Create a Budget Plan
Based on your income, expenses, goals, and spending habits, create a monthly budget plan. This plan should outline how much money you will allocate to each expense category, such as housing, transportation, food, entertainment, and savings. Be sure to leave some room for unexpected expenses, such as car repairs or medical bills.
Review and Adjust
After you have created your budget plan, review it periodically to ensure that you are staying on track. Adjust your plan as needed to accommodate changes in your income, expenses, or goals.
Family budgeting is a critical component of financial management that can help individuals and families achieve financial stability and security. By following these tips and creating a comprehensive budget plan, you can manage your money effectively and reach your financial and life goals.
For help with your family budgeting and other wealth advice needs please contact Boutique Advisers on 08 9381 8779.
Jodi Escudier is a financial adviser who helps women and families identify and reach financial goals through positive strategic advice. Over the last 8 years Jodi has worked together with clients to develop a pathway to a better financial future and secure wealth for themselves both now and as they navigate life’s everchanging demands.