Knowing how to make a monthly budget is the important first step to financial freedom. That means retiring comfortably, spending time with your family, and traveling like you always wanted. Monthly budgets, however, aren’t something you can set and forget about. In order to make one work for you and your family, you must always review and tweak it. To help, here are seven tips for improving your monthly budget for your family:
1. Pay Yourself First
To start, ensure that you’re including significant savings in your budget. With retirement looming it’s important to set enough money aside so that you’re comfortable for the rest of your life. Many experts subscribe to the theory that at least 20% of your monthly income should be saved.
2. Estimate One-Off Expenses in Every Monthly Budget
Once you know how to make a budget, it’s time to consider larger, one-time expenses. This could include family vacations, helping the grandkids pay for college, or replacing a water heater five years down the road.
Oftentimes it is impossible to know when these unforeseen expenses will pop up or how much they’ll cost, but giving your best guess ensures you’re never caught completely off-guard. Whatever you want to call it, emergency fund, repair budget, fun money, etc., set aside some money every month just in case!
3. Trim the Fat
As you track your discretionary daily and monthly expenses, you’ll have a firm idea of exactly where your money goes. After a couple of months, it’s time to take a step back and see where you can make cuts.
What’s most important to you? Can you cut out the daily coffee if it means taking your kids to a movie each Saturday? Perhaps you can cook at home more often instead of eating out? The key is to make it liveable. Decide what’s most important to you and trim around that.
4. Focus Strategically When Creating a Monthly Budget
For Americans aged 65 years or older, two-thirds of spending is in just three categories: housing, transportation, and health care. Take steps now that help control these costs in the future, such as paying off a mortgage, downsizing your home, or budgeting slightly larger contributions to a Health Savings Account (HSA).
5. Add a Buffer
Life is unpredictable. Including a buffer in your monthly budget savings accounts for those pesky unexpected expenses is key. Earmark a monthly buffer in your budget and if it goes unused, you have extra money to save or pay down debt.
6. Watch Prices Carefully
By budgeting and planning, you will often save money by being smart. For example, if you budget for a new refrigerator since you know it’s due to wear down, you can buy one in November when they tend to be at their lowest price. If you wait until it breaks down next May, when they’re at their most expensive, you’ll pay over $200 more on average.
7. Leverage Your Resources
Finally, it’s important to use the right resources to make monthly budgeting and saving that much easier. Our online banking tool or payment calculator, for example, allows you to aggregate multiple financial accounts, track and categorize expenses, and visualize your budget to make it easier to identify and focus on areas that require your attention.
To ensure you have everything you need to budget, save, and retire, make sure to contact us.