9 Tips To Help You With Your Household Budget

Couple calculating their budgetPutting together a household budget might seem to be a menial everyday task that people have under the bag. They see it as nothing more than a chore much like how they need to wash the dishes, put the clothes in the laundry or even cook dinner for the family. But just like most of the chores mentioned, there are much more to them than what you see on the surface.

Cooking dinner might seem just a necessity but you are actually making sure your family is able to take in all the important nutrients their body needs. Cleaning dirty clothes can be seen as a way to make them feel good about themselves. Having a budget for your finances can help you get through a tight financial situation or even prepare your needs for the future.

Budgeting is an acquired skill but you need to have the basics to make it work. Those would have come from your parents when they were trying to teach about money when they asked you to put some inside that piggy bank. It could also come from teachers because there a lot of schools that are now incorporating financial lessons into the curriculum.

As Investopedia.com explains it, a budget is having your expenses and income tallied to make sure that you are able to meet all your needs. Sounds easy enough for most people because they just take what they earn in a month and list it down as well as their expenses and they see where the money goes. On the surface, that is what should be done but in reality, people have several approaches to how they put together their household budget.

There are instances where some people doesn’t even bother to have a budget for their finances while others just puts together estimates at the end of the month thinking it is better than not having a budget altogether. But the point is that if you are going to do something, better do it right than half bake the effort especially when it comes to your finances.

Putting order in your budgeting efforts

There are countless ways to help you with your financial budget but here are a few things to consider when going about your budget.

  • List down and be specific with your goals. You need to be very specific with your plans including deadlines because if forces you to be strict with your actions. It also forces you to look at concrete results like the amount of your 401(k) for retirement or even how much you already have for a downpayment on a house. Be sure to list down your goal of either retiring early or buying a house and set deadlines for them.
  • Put together a doable budget. Work around your budget to be able to reach your goal but make sure that the amounts you are working with are doable. You might be putting high amounts for your retirement fund but you limit your grocery budget and decide that you will live off Chinese take-out for a year or that you will walk to and from work for a few months. Work with a budget that is feasible and not overdo it that you find yourself in a hospital bed.
  • Resist advertisement and retailer tricks. When you walk around the mall, you need to be aware of the various ways retailers will make you want to buy their items. From the smell of that bread or that sexy poster of a model wearing the red dress or even that trusted Hollywood A-lister endorsing the product. These are all geared to make you open your wallets and spend money.
  • Track your spending. The time will come when you have to buy items that you need and even in your everyday life, you buy various stuff from lunch to gum to even new slippers. It is a good practice to list down all your spending for at least a month and see where you might be overspending and what you can cut down. This will help you pinpoint some of the areas that leads to excessive expenses make the necessary adjustments.
  • You can negotiate the prices of your purchases. When handling your household budget, you would always look for ways to lower down the cost and one idea is to try and negotiate the prices of the items you are buying. It might be hard at first but remember that the worst thing that could happen is you get no for answer. Who knows you might get a favorable discount just by asking for it.
  • Put in research time for big-ticket items.  One of the biggest threats to your retirement fund or even your reserve funds is buying big-ticket items without prior research. Look up the items and see where you can get the best deal on the item. This will surely help you save money.
  • Debt can be a good thing. Do not be afraid of taking on debt because there are times when you really need it to increase your personal wealth. Think of a mortgage loan or even student loans, if you do not have enough money to go to attend higher education or buy your own house, will you just let that dream pass you by? Taking out loans can also help you improve your finances.
  • Be aggressive in paying down high interest debt. When you take up debt, you might want to focus on paying down those with the highest interest rate first like credit cards. Doing so can help you save money in the long run and your household budget will thank you for it.
  • Read and understand your statements.  An average consumer’s credit card debt according to Nerdwallet.com is at about $15,000. That means a lot of purchases and statements coming in every month. When you are juggling your budget, you need to take a close look at the statements and make sure that your payments are being posted on time and that you have not fallen victim to any identity theft cases.

Common budget killers

As you go and manage your household budget, it would benefit you to know some of the most common mistakes that affects your financial planning.

  • Emotional purchases. One of the credit card rules that you need to remember is that you need to keep you emotions in check when you are making purchases especially if you are depressed. You tend to cope with it by shopping and sometimes see is as retail therapy. This will only get you deeper in debt. Watch this video and see what retail therapy is:

  • Uninformed financial decisions. At this day and age, there is almost no room for making uninformed financial decisions. The internet offers vast resources for almost any financial questions you might have. There are also a lot of financial experts that you can reach out to for help. They can take a look at your financial situation and lay out some recommended course of action to help you reach your objectives. But of course you still need to keep your eyes out because even financial experts make mistakes as evidenced by what Bankrate.com discussed in an article.

Putting together your household budget might seem easy on the outside but once you get down to it, you will see all the challenges it poses. But as you go along, you get better at it and this helps you prepare your finances for the future.