Story brought to you by Savvy.
One of the toughest things about being a parent is successfully running the family budget.
From the challenges of feeding a hoard of hungry kids everyday to the unexpected school excursions and the constant flow of new clothes, that they seem to have grown out of before you've even finished paying the last lot off.
Add to that the rent or mortgage repayment, the never ending cycle of household bills and all of those unexpected expenses that always seem to crop up, and you've got a real challenge on your hands.
It can be especially complicated if you still have residual debt from when you were younger. Luckily, there are always things you can do to help improve your financial position and successfully keep your budget in check.
1 - Keep track of your spending
One of the quickest ways to end up in financial stress is to get yourself into a position where you're spending more money each week than you're bringing in.
That's why it is important to keep track of every dollar. This means not only keeping a record of all purchases - to allow you to get a better idea of what your spending habits are and see where you can save money - but also where the "hidden costs" in your budget are too.
If you do this for a couple of weeks, you'll likely be shocked to realise how quickly all of 'little things' add up. Things like account and transaction fees, interest charges, unused subscriptions.
Becoming more conscious of your spending is a great way to get an overview of your situation and figure out where you can save a buck.
Once you've done that, it is time to...
2 - Draw up a budget and stick to it
The best way to get your finances under control is to have a budget and stick to it.
The first step in setting up a budget is recording your income. You need to have a firm grasp on how much money is coming into the household.
Step two: add up all of your expenses. Start with the essentials, your rent or mortgage payments, gas, electricity, groceries, transport, car repayments, debt obligations, kids school fees, whatever.
Figure out how often you need to pay each one, be it weekly, fortnightly or monthly. Then start adding in the rest of your expenditure.
Once you've done that start separating these into individual categories. Start fixed expenses, so things that need to be paid regardless i.e. things you actually need.
Next move onto debt, figure out how much of your budget is spent on debt that can be reduced. Then start looking at your unexpected costs, these are important too, they can help you to learn for the future and plan ahead.
Finally, add in your discretionary spending, this is where those records we talked about before come in handy. See how much you are spending on hobbies, dinners out, five bucks here, ten there, those little expenses.
Once you know where your money is going, look for places you can reasonably cut back and save money. And then...
3 - Start planning ahead
Once you have a firm grasp on your finances it is time to start planning ahead.
If you're going to the supermarket, make sure you take a list and don't deviate from it. Nothing chews into the family budget quicker than impulse buying, especially at the behest of nagging kids.
Cut back on fast food. Get into a routine of cooking healthy nutritious dinners at the same time each night. Experiment with exciting recipes that can be made cheaply with plenty of fresh veggies.
Look at your unexpected expenses of the last two years and operate on the assumption these will come up again. Put some money away for a rainy day to help cover them.
Also, go to the kids' schools and ask their teachers what the plan is this year. Are there going to be school excursions? Camp even? What about book week? Have the money ready when these things arise.
Figure out what debts you have that are costing you the most in interest and try to pay them off more quickly. Alternatively, look into doing some debt consolidation. If you improve your credit score, it will help with interest rates when you borrow money in the future.
4 - Borrow responsibly and know what options are available to you
Sometimes taking on new debts is unavoidable, for big things like a new house or car, you will be taking on big debts that will be part of the budget for years to come.
However, you also need to be aware that sometimes in life, things happen that are beyond your control, be it a medical emergency where you need to buy an expensive antibiotic for one of the kids or a last minute plan trip to see a dying relative. Sometimes, it is as simple as needing car repairs. In these situations, you need to find a way to make up a shortfall in the budget.
Sometimes you have no other options but to borrow money to cover these unexpected expenses, whether it is swiping a credit card or taking out finance.
Things like payday loans are also an option that are available. They are quick, easily approved and can be applied for entirely online.
However, before you go down this path it is important to be aware of the interest rates, establishment fees and repayment arrangements, all before you sign on the line. It is important that you understand the terms of the agreement.
You also need to work those repayments into your budget and have a plan to pay them back as soon as possible. There is no point in borrowing more than you can afford.
So there you have it...
Running a household budget can be tough but as long as you have a firm understanding of your personal finances - including both how much is coming in and how much you're spending - and draw up a budget that you stick to, you will be able to navigate this tough task.
Just remember to always plan ahead, look for ways to save money where you can, put some money away for emergencies, reduce your debt burden, and always have a plan on how to repay unexpected debts if you have to take them. In other words, if you're savvy, you'll be alright.
- Disclaimer: This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. It is suggested that no person should act specifically on the basis of the information contained in this story but should seek appropriate professional advice based upon their own personal circumstances.