A family has so many different costs and expenses, as well as various incomes, that it can be very difficult to keep track of it all. With inflation continuing and wages stagnating, it is getting more and more difficult for families to keep their financial heads above water. It is essential that you stay on top of your finances and know exactly what is coming in and going out, and when. Here are some tips on how to keep your family’s finances organised and healthy.
Make a list of your incomes
Diversifying your income streams is a smart financial strategy that can provide stability and resilience. Your primary source of income may be from your job, where you receive a regular salary each month. If you have a partner who is also working, their income should be accounted for as well. Additionally, you may have other sources of income to consider.
For instance, if you own a property, renting it out can generate rental income that adds to your monthly earnings. Similarly, investments such as stocks or mutual funds may yield dividends regularly, contributing to your overall income. It’s important to diligently track and document all sources of income, regardless of their size, to gain a comprehensive understanding of your financial situation. This allows you to effectively manage your finances and make informed decisions about budgeting, saving, and investing for the future.
Make a list of all expenses
Sit down and have a think about the money that has to go out of your account each month. List the items in amount order. You’ll probably start with the rent/mortgage at the top, then go down to car expenses, food, utility bills, and then there will be money for entertainment, the children’s pocket money and other smaller expenses. . If you need help getting to grips with your mortgage repayments, you can find some independent mortgage advice that can guide you to healthier finances. After writing this list you will have a rough idea of how much you spend on toys, clothes, films, games and whatever other hobbies your family members enjoy. If you do not know the exact cost of such items, then the next tip will be relevant.
Keep your receipts
That might seem like an incredibly boring thing to do but personal finance is a bit boring – accept it. Keeping your receipts of your shopping means that you can see exactly how much you are spending each week. Receipts are essential for less regular expenses, like going out to restaurants, buying clothes, toys or video games. It might seem like a nuisance trying to remember to keep receipts and then holding onto them but, luckily, technology has that covered. There are now apps available that allow you to use your smartphone to scan receipts, automatically recording the expense and noting it down into a budget. Apps like Wave make it easy to scan receipts and keep track of how much you are spending each month.
Make a budget
Once you have made a list of all of your incomings and outgoings for each month and you are sure that you have accounted for everything, then you can put them together to create a budget. Your budget should add up all your expenses and all of your incomes so that you can see exactly how much money you have left over. There are plenty of budgeting apps that can make calculating and keeping a budget easier.
Evaluate it
Take a look at your budget and see if anything pops out at you. Maybe you are spending a large amount on going out to eat, or maybe your phone bill is huge or, perhaps, too much is being spent on clothing. Take a look at this average household budget in the UK and see how it compares with yours. The 50/30/20 ratio is a good rule to follow, generally. It means 50% of your income should be spent on needs, 30% should be spent on wants and 20% should be saved.
Look out for ways to save or get money back
If you’ve already trimmed your budget but still feel financially strained, there are additional ways to save money and boost your finances.
For example, consider switching to heating your home with oil, especially during the winter months. It’s a cost-effective alternative that can lead to significant savings on your energy bills. Buying heating oil in bulk from companies like Packard Fuels and storing it safely on your property for future use can also help you save money in the long run.
Similarly, when it comes to your home’s electric appliances, there are opportunities for savings. Older appliances tend to be less energy-efficient and can drive up your utility bills. If you’ve had your appliances for a while, it might be worth considering upgrading to newer, more efficient models. This investment can have a positive impact on your electricity costs over time.
Also, look out for introductory offers at retailers to see if you can get vouchers. Additionally, you might have been mis-sold PPI. If you think that is the case, then you can get compensation from the company that sold you the policy. For example, you could get thousands of pounds back with a Halifax PPI Refund.
Conclusion
Managing your finances effectively relies heavily on understanding your income and expenses. It’s crucial to have a clear picture of the money flowing into and out of your accounts. Once you have this information, you can assess your financial situation and make informed decisions.
If you find that your expenses are outweighing your income, you may need to explore ways to cut costs. This could involve identifying areas where you can reduce spending, such as dining out less frequently or cancelling unused subscriptions. On the other hand, if your income is insufficient to cover your expenses, you might need to consider avenues to increase your earnings.
This could include negotiating a higher salary, taking on a side hustle, or investing in opportunities that generate passive income. By staying proactive and regularly reviewing your financial status, you can take control of your finances and work towards achieving your financial goals.