What’s the fastest way to end a conversation with your husband?
Bring up the words “family budget!”
That’s how it is in my house, but budgeting and teaching kids about money are top concerns for modern moms.
I sure hope my kids are better with their money than I’ve been over the years.
I’ve worked hard to make improvements now that I realize my kids are little sponges, watching me and soaking up all my habits – good and bad.
Along the way, I have adapted their tips and drawn on my formal business education to make them my own.
There are a number of strategies out there for improving your family finances and giving your budget a quick money makeover.
I’m not sure I can think of a single mom I know that isn’t interested in more ways to save money.
These are my top five simple money management strategies that never let me down whether I need to pinch some pennies or make a few extra dollars when funds are tight.
1. Know What’s Coming In
Knowing what money is coming into your household is a key starting place in any budget.
It’s really difficult to create a budget when you don’t know how much money you have to work with.
If you have a regular pay cheque from a job, then I recommend creating your budget around the frequency of your pay (every two weeks or monthly are the most common).
If your income is coming from self-employment or a combination of a job and self-employment, things are a little trickier. In this case, I recommend you use an average month’s income or a leaner month to be conservative.
2. Review Your Spending
It’s a really good idea to review your budget every time something changes with your family situation or income.
This can be a layoff, a new job, starting a business, or having a baby. Reviewing your spending is easy but it can be time consuming in order to be thorough.
To get a good idea of your average spending habits, use bank and credit card statements for the previous three months.
Make sure you have statements from all bank accounts and credit cards.
Then go through and group your spending into categories such as housing, vehicle, food, entertainment, clothing, gifts, etc.
Choose categories make the most sense to you. Once you’ve got a total for each category, you can divide by three to get the average monthly amount you spend on each type of expense.
The goal with categorizing your expenses is to get a sense of where you are spending the most money and to investigate whether there is an opportunity to reduce those expenses.
Expenses like entertainment, clothing, and gifts are usually categories that can easily be reduced.
Sometimes when we get comfortable in our budget, our expenses start to creep up, and before we know it, we are having to use credit cards more often than we’d like.
So, if you haven’t reviewed your spending in a while, take this opportunity to have a look and make sure you’re still on track.
3. Consider the Little Things
You’d be surprised how quickly little things like fancy coffees, chocolate bars, gum, books, and magazines add up.
Take an honest look at where you are spending your money everyday.
You might notice a lot of impulse purchases or little habits that added up to a lot more than you expected when you checked your monthly expenses.
David Bach calls the little things the latte factor and he recently coined the term “double latte factor”.
The double latte factor refers to subscription fees. Many times we sign up for something we think will be amazing only to forget about it several months later.
Make sure you aren’t paying subscription fees for anything you don’t need or don’t enjoy.
For things you do need like your phone and internet, call your provider and make sure you are getting the absolute best rate.
Many service providers change their plans all the time so you’ll want to make sure you are on the best and least expensive one for your needs.
4. Keep Your Debt in Check
Debt is pretty common for families these days but you want to make sure you aren’t paying more interest than you need to.
Stay away from carrying a balance on your credit cards if at all possible, because they carry the highest interest charges when it comes to debt.
If you do have credit card debt, try calling the credit card company and negotiating for a lower interest rate.
You also might be able to save a lot of interest by having a mortgage broker help you with your mortgage.
Mortgage brokers have access to many different types of lenders so they are able to get you the best interest rate and terms possible.
5. Turn Your Hobby Into Cash
If you are really good at keeping your expenses in line but are still falling short on income every month, try turning a hobby into a business.
If you’re a great baker, try advertising that you’ll bake cakes for birthday parties. Or maybe you love to make jewelry and can start selling it through a local store.
Get creative. There are many great ways for moms to earn an income from home that require little to zero money for start up costs.
Money management doesn’t have to be hard but it is important, especially when our kids are watching our every move. It’s best to stay on top of things so your family can enjoy the best financial health possible.
Try these five easy ways to makeover your budget and you’ll be well on your way to saving for that next family vacation or paying off some debt that’s weighing you down. Let me know how it goes!