My Personal Finance Blog » Family Budget

How To Make A Budget For Family Financial Stability

admin — Wed, 15 Jun 2011 15:21:45 +0000

Keeping control of your personal finances is, in theory, a fairly simple process. It is only human nature that makes home budgeting and financial control so difficult for many people. However, for the sake of this article, we will consider the simple side of the household budget equation, which is making a budget in the first place.

A good starting point in your quest to make a home budget, is to take stock of your current and recent situation, and list out all your monthly outgoings.

If you only do this from memory, there is a chance you will miss one or more important items. You probably have several sources of information on what those regular outgoings are, and whether they are easy to find depends on how well organised you are with your paperwork. It is worth checking back over at least three months bank and credit card statements, and jot down what your regular payments are out of those. At the same time, you can also make a note of items of expenditure that may recur later on.

Another source of information will be the bills and receipts that you have received over the past quarter. If you have not kept such documents and records before, then now is a good time to start. The good organisation of your important financial documents, and orderly filing of bills and receipts, will stand you in good stead for controlling the family budget when it is set.

Going over what you have spent over the last quarter will cover most if not all of your regular payments. However, it is important to think about whether you have any quarterly, annual, or new commitments that may not have shown up in your previous search. This part of the process in making your budget should give you a list that includes utilities (eg water, electricity, gas and telephone), insurance payments, mortgage and loan repayments, and credit card payments.

The regular payments you have so far found will form the core of your household budget. You can now turn those into a formal list, either on paper or on a spreadsheet, and put the amounts into the next column, with a heading notifying the month. Before moving on to the next phase, add a further 11 columns on the paper or spreadsheet, with the headings changed to appropriate months until you have a column for each calendar month for a year. I have prepared an example budget spreadsheet to help you.

For each of the items listed, decide whether they are monthly, quarterly, or yearly, payments, then repeat the monthly amounts in all the columns that apply. For example, monthly payments will go in all 12 columns but quarterly in only in the four columns when payment is due.

The next stage is for you to consider what other necessary expenditure will come out of your income every month. These other expenditure items probably do not show up as regular payments in the first stage, though individual payments may. These items may include food, household goods such as detergents, car maintenance, petrol (gasoline), and fares, which are essential to you, and you need to budget for each month.

Again, list these items in the budget list, and then enter amounts in each monthly column. What you will have then will be the “essential expenditure” part of the budget. This, if you like, is the unavoidable part of your budget. At least, it is unavoidable in the short term.

On top of that essential expenditure, though, we all have discretionary, unnecessary or indulgent expenditure, on things we like to spend on but do not actually have to.

However, before considering your non essential outgoings, there are two things it is advisable to do:

1. Total your monthly essential expenditure for each of the next 12 months, and

2. Write (or type) in your monthly net income at the top of your budget form.

Hopefully, “2″ is much higher than “1″, and you still have some income left to spend on non-essential things that make life more pleasant, plus some regular savings too.

Now that you know that you have money spare to spend on non-essentials, such as holidays and eating out, then you can also list those. You will then have a complete picture of your spending and income patterns, and have a basic budget from which you can plan ahead and keep your finances under control. If all goes well, you can also budget to save a reasonable amount each month, putting you well on the way to financial stability.

7 Important Benefits of Preparing your Personal/home Budget Using a Spreadsheet

admin — Wed, 18 May 2011 17:46:03 +0000

Have you ever wished to make a start on setting up a home budget but were not sure how to start? Couldn’t work out how to do the calculations and were not sure whether the answer would be correct? No more reason to stall. Use a pre-formatted spreadsheet that you only have to enter your financial income and expenses into. There are many of these available on the Internet. Ready to look at the benefits? Let’s go.

Benefit #1. A spreadsheet clearly shows your thinking and the calculations used to arrive at the answer. What’s more, it allows you to add extra items quickly and see their impact on your financial position, or your free spending amount.

Benefit #2. A spreadsheet can be quickly and easily copied and the data changed to suit a friend or another member of the family. Maybe a teen’s budget or a hobby budget could be started using the same initial template. You could also easily copy one month’s budget and reproduce it 11 more times to last for a whole year.

Benefit #3. A spreadsheet can be printed and taken with you for further study, or passed on to members of the family for their input.

Benefit #4. A spreadsheet allows for “What If” questions to be asked of it. For instance, what if you were to reduce the spending on clothes and add some extra funds to credit card payments and/or holiday savings? The answer to this question could be instantly calculated by just changing 2 or 3 numbers.

Benefit #5. A spreadsheet can teach you a new, very marketable skill. You may find you pick up this skill really quickly and want to add more elements to the budget like graphs, personalized formatting and more calculations. A spreadsheet is really only a calculator, but with a lot more flexibility. Setting up a budget for yourself, is a good place to start, since this is an easy project. You could progress on to building a Savings Growth Calculator, a Retirement Goal Calculator or a hobby expense and income sheet, and the list goes on. Spreadsheets are used everywhere in the finance, marketing, teaching, manufacturing and sales functions in many businesses worldwide.

Benefit #6. A spreadsheet can improve your accuracy. If you have set up the spreadsheet correctly, you can be sure that the answers provided are correct, time after time. It’s easy to see the formulae used and to check their correctness. Others can check these for you also, if you need some help in this area.

Benefit #7. A spreadsheet allows for easy changes to be made to your assumptions and data, as your circumstances change over time. Let’s say you receive a substantial pay raise? No worries. Just adjust the income numbers and the new answer falls out. What if you wish to spend less on some item for a month and apply these savings to another expense item or save a little more? Not a problem. Just change the required data and the answer is immediately available.

If you want your budget preparation task to be as simple as possible don’t waste your valuable time with scraps of paper and a calculator. Use the tool that will save you time and hassle, the spreadsheet.

Make a Financial Plan For Your Family

admin — Wed, 04 May 2011 11:26:33 +0000

Creating a solid financial plan for retirement requires that you understand how money matters such as savings, debt, expenses, budgeting, and insurance work together. These are just some of the things you need to consider if you want to build and protect funds for yourself, as well as your family.

Making a budget for a certain period, such as a month, week, year, or even day, shows you how much money you’ve spent, what you’ve spent it on, and how much you have left. If you document your expenses, you’ll have a better grasp of where your money is going and what your current priorities are.

After making your budget, you’ll see all the major and minor expenses you’ve put your money towards. You’ll also be able to see how you can cut back on certain purchases or services, and use this money for other, more important things. Remember, the little purchases you make here and there can add up to a significant sum.

If you’re like most people, you probably have some amount of debt that can eventually put a damper on your financial plans if they’re not taken care of soonest. Paying more than the minimum due payment per month can help you decrease or eliminate your debt over time. This practice can also save you up to thousands of dollars in interest over several years.

Saving for retirement needs to be one of the senior’s top priorities, as many of today’s retirees are having trouble making ends meet due to the current conditions of the economy. You can take advantage of accounts such as your employer’s 401K plan, a personal retirement account, or a special retirement account if you’re self-employed. You can get tax-free earnings, credits, and deductions with these.

Real wealth can be achieved, or at least protected, by using these financial planning tips. Planning your finances for retirement isn’t easy, but these basic steps can get you on your way to a happy and stable retirement period. Contact your financial advisor to know how you can build a better financial plan.

Why the Average Family Budget is So Important

admin — Fri, 08 Apr 2011 21:32:45 +0000

The average family budget is nothing more then a tool that benefits the financial future of the entire household. While many people feel that a household budget is a waste of time until you know exactly what your money is doing and where it is going you will never have true control of your family’s finances. Once you have control of your money doing this you’ll be surprised at how easy the whole process actually is.

The beauty of making a budget is that it doesn’t matter how much money you have you will still benefit from its use. The point is to first find out where your money is going and then once you take back control you can tell it what to do for you and your family. This is the biggest problem most people have with their money. Sure, it seems like there is money to spend but before the next paycheck hits the bank it’s already gone and you’re not really sure where it all went.

This is where the family budget helps. The first thing it does is tell you exactly how much money you have to spend each month. By planning a month ahead you can tell each dollar where it is going before it hits your bank account. It is really nothing more then a road map for your money. In fact many people simply call it a “cash flow plan”, which sounds better then calling it a budget.

Another area of financial trouble many families experience is the inability to save money for any number of things including retirement, a down payment on a new home, or even paying cash for a car. A household budget can help anyone who has trouble saving set savings goals and meet them. A “cash flow plan” has a way of freeing up money that can be put to better long term family financial goals.

If you take your cash flow plan seriously and use it to give your money a plan you will soon see the positive dividends it can bring. It will be hard at first to stick to your plan but as you work your average family budget it will soon become a necessary habit that you can’t live without.

Types of Family Budgets

admin — Wed, 30 Mar 2011 04:30:06 +0000

Once you know how to initially set up a family budget, figuring out what kind of budget you need is the next step. A common mistake is thinking there is only one kind, but in reality there are budgets that can help your monthly family spending, help create financial safety or help you and your family achieve your financial goals.

As I’m sure you’ve already read our article on how to set up a family budget, the next step is here- figuring out if you need a comprehensive, problem solving or planning budget.

1. Comprehensive Budget (used for general family budgeting)

i. This family budget can also be referred to as a Master Budget. This budget is for families on a limited income who is trying to limit spending. This budget would include making lists of your spending, with categories and exact numbers broken down by month. This comes in most handy when you need to cut down your family expenses because you have all your information in an organized list in front of you.

ii. This budget can also be used to review your spending over a long period of time, which is referred to as an overall budget.

2. Problem Solving Budget (used for creating financial safety for a family on a budget)

i. This type of family budgeting tool works off the comprehensive budget when you notice you are having problems keeping your spending down in a particular area. You create a more detailed list of the area so as to see exactly where your money is going and what areas you can afford to stop spending on.

ii. This budget is known for finding problem spending areas in a family budget and fixing them.

3. Planning Budget (used for achieving your family’s financial goals)

i. This budget works hand in hand with your family investments. If you are planning your budget specifically around an event or time in your life, this budget can help. It adds an extra category to your initial family budget for your goal.

ii. First, you pay for all other necessary expenses (rent, bills, groceries, etc.). With the leftover money, decide on an amount to set aside in this column for your investment. This is a category that does not show money spent, but money saved.

iii. This plan can be used for family savings as well as investments. This column does not need to be geared toward a specific goal; instead, it can be family savings or money for emergencies. Either way, it is an important category for both family budgeting and investing.

The Techniques of Family Financial Planning

admin — Mon, 21 Mar 2011 11:28:55 +0000

For numerous families a controversial subject is family financial planning, as on many occasions it seems as if the money coming in is never equivalent to the money going out. It always seems that there is more money being spent than what is actually being gained by the family. Every family needs to take control of their finances by effectively planning and eliminating poor spending techniques.

A good technique is to use the services of an expert financial advisor to help with the family’s financial goals, as leaving your finances unsupervised could result in your finances getting out of control. The financial advisor should help you by ensuring that you have a family budget and that you eliminate wasteful spending, decrease high interest debts and transform your debts into wealth.

Another Technique to enhance your family’s financial standing is to devise a strategic plan geared towards reducing your debt exposure and consolidating the family’s debt into one lower interest loan. For example with increasing problems associated with credit cards, it is recommended that you destroy all the credit cards except one, so as to avoid the additionally debts.

To effectively plan and maintain good finances, your family will need to undertake more money saving programs and less spending, thus focusing more on long-term goals rather than short term spending. It’s a good idea to get your family involved in long term financial viable investment schemes and programs.

Your family should engage in cost containment practices for a better financial future like distinguishing between wants and needs when shopping, saving on electricity and other utilities and buying grocery and food items in bulk. These cost saving techniques and many others will ensure that money is not being squandered or wasted.

Family financial planning techniques should be employed to secure your family’s future and well being, as you will definitely not want to find yourself in a position where you fear retirement or those college tuition fees, because of a lack of financial preparation.

Using credit scores to set car insurance premium rates

admin — Sun, 23 May 2010 16:58:29 +0000

When you look around your neighborhoods, it’s hard to find any good news. Friends and neighbors may have lost their jobs or be on short-time. There are foreclosed properties on every street. Shops and businesses have been closing down with increasing frequency. These are the signs of a real recession where unemployment and poverty stalk the land. The cause of all this pain is not hard to find. We have all been living beyond our means. When the banks and credit card companies offered us more money to borrow, we just took it. Why bother to save when the value of our homes only goes up? Let’s plan for our retirement by borrowing cheap money and buying stocks and other more risky investments. No-one ever loses if they follow the advice of the credit rating agencies. Well, we know better now. What goes up can also come down. What is given a triple A rating can be junk tomorrow.

In the midst of all this chaos, the credit card operators have been cutting back on the borrowing limits. This has forced pain on us for two reasons. Firstly, finding the money to pay down our debts more quickly means redesigning the family budget. Sacrifices have to be made. Secondly, the way the credit score is calculated depends in part on the extent to which we use the credit cards we have. If the limits are reduced, we look like bad risks because the amount borrowed is closer to the limit. We have less money available to borrow and cut down on card usage so we can repay faster. Put the two together and the score falls. This is a direct criticism of the methods used to calculate the scores. It produces a fundamentally unfair result during a recession.

This would not be a problem if the credit score was only used by banks and credit card operators. But it’s also used by companies to help decide whether to employ you, by landlords deciding whether to rent to you and by insurance companies deciding whether you are a responsible person. National figures show more than half all insurance companies use credit scores as a key factor in deciding your premium rate. This is extraordinary. There is only one possible effect of being in debt when it comes to the way in which you drive. If you cannot afford to repair your vehicle, you drive defensively to reduce the risk of an accident.

Some states like California and Massachusetts have banned the use of credit score for this purpose, but they are a minority. They cite discrimination as a reason for the ban. The majority of the population without access to banking services and credit cards fall into minority racial groups. When they do not have a credit score, they are forced to pay a higher premium simply because of who they are, not how they drive. So, when you are looking for affordable cover, get the maximum possible number of car insurance quotes to find the best policies. If you live in a state which refuses the regulation of the car insurance market, contact your local government representatives and tell them how much pain you are suffering because of this unfair use of credit scores.

Money saving tips for young car owners

admin — Thu, 11 Mar 2010 20:59:36 +0000

It should be a big surprise to anyone that young drivers have higher insurance rates than older car owners. There is a set of reasons behind such a state of affairs and parents unwilling to pay high premium rates for their teenage drivers shouldn’t think about dropping the coverage altogether. Instead, there are effective ways your teen driver can opt for lower insurance rates and save you some buck from the family budget. Here are some tips on how to do that:

1. Learn the offers at the market.

Shop around and see what local insurance companies have to offer. There are providers that specialize in high risk drivers (and teens also make part of this group), however there is also a small number of companies that work exclusively with teenage car owners and offer preferential rates. If you are able to find such a company in your area that would be the best option for you. Otherwise, compare the rates with different companies and choose the one that is more liberal towards young car owners.

2. Be a good student.

Good students can usually opt for special discounts with the majority of car insurance providers. This is because the statistics have proven that good students are safer and less risky drivers and thus can have lower rates. However, you should ask the insurance company what are the requirements and will be ready to provide proof with your current

3. Encourage the teen to pay a part of the premium.

Nothing encourages better saving and hard work when financial interest, so when you make the teen pay a part of the insurance premium you will instantly see how he or she tries to minimize these costs. This can be a good push for better grades and research on other insurance options. But be realistic about it, if your teen can’t manage to pay the premium in whole don’t put the burden and make him pay only the part he can.

4. Raise the deductibles.

Deductibles are the amount of money you have to pay upfront from your wallet before receiving the insurance benefits. And they are reverse-related to the insurance premiums, meaning that the higher is your deductible the lower premiums you will pay each year. So if your policy carries the smallest deductible, it’s better to raise it to the amount you can really pay out of pocket if something happens. This will cut your premiums for about 10-20%

5. Buy a vehicle that will give you low car insurance quotes.

It shouldn’t be a revelation to most of you that the car you drive strongly influences the rates you pay for insurance. And finding an insurance-friendly auto for your teen will really help cut the costs. Try searching car insurance quotes online to see what autos offer you the best saving opportunities and cost less to insure.

6. See if you can include the teen into your policy.

Some auto insurance companies allow parents to include teens into their insurance policies and sometimes it will help you in saving on insurance rates compared to having a separate policy for the young driver. Ask your insurance agent about your possibilities and if has any financial sense and provides some money saving options then write your teen in.

Cheapest cars in terms of auto insurance

admin — Sat, 13 Feb 2010 11:13:26 +0000

Do you take the safety and insurance costs of the car when shopping for a new ride? If no, you definitely should consider it, because the costs associated with auto insurance can be a burden to your family budget if you choose the wrong car. And it could turn out that a relatively cheap car will cost you way more in auto insurance premiums over the years compared to a more expensive auto with low auto insurance quotes. The Highway Loss Data Institute compiles and analyzes the information regarding insurance costs of all car makes and models available on the market today and many insurance companies base their rates on the data provided with this institute’s reports.

But besides the HLDI reports every insurance company runs its own statistics regarding insurance costs of all autos on the road, which strongly influence the final car insurance quotes you will get when shopping around. Insurers analyze the costs of repair, theft, maintenance, damage, injuries and the overall claim history of a particular car model before giving our a rate. And sometimes these factors can make your premiums differ in times for two same-priced cars. Why is that? Because some cars are more likely to be stolen than others, some cars have better safety features and cost less to repair, and some cars just can’t leave the top spots of insurance claim ratings.

So before you decide to buy a car, make sure it doesn’t make part of the most frequently stolen list:

Honda Accord
Toyota Camry
Ford F-150
Acura Integra
Nissan Sentra
Toyota Corolla
Toyota Pickups

Or the most expensive theft claim list:

Cadillac Escalade
Chevrolet Corvette Convertible
Lincoln Navigator

Cars that are known to cause serious injuries to their drivers or passengers frequently will also cost more to insure than safer car models. So think twice before buying one of the following cars, because your rates will be more expensive:

Suzuki Esteem
Kia Rio
Mitsubishi Mirage
Kia Spectra

Collision coverage and cost is also analyzed thoroughly and cars having the lowest ratings here will likely have lower insurance rates. So pay attention to the following cars, having the least expensive collision costs if you want your premiums low:

Ford Excursion
GMC 2500
GMC Safari
GMC Yukon XL

Speaking in general, be cautious when buying sports cars and big engine vehicles as they always have high auto insurance quotes. This is because fast and powerful cars are more risky and usually have high damage and injury cost as well as frequent insurance claims. Luxury cars also have high auto insurance premiums due to the high repair costs and infamous popularity among car thieves. Big SUVs can also turn out to be costly to insure due to high damage costs they are known for.

If you want a car that will be cheap to insure think of a medium sized car that has many safety features installed and just enough power to drive safely without the temptation to race on the highway. For a more detailed information on the car makes and models, visit he HLDI site. Or try getting auto insurance quotes on different models and comparing them online, as it is a very popular and accessible option today. And remember that different companies will have different rates for the same car, so if you have firmly decided on a particular auto, maybe it’s better to see what other insurers have to offer first.

Paying for your policy

admin — Fri, 05 Feb 2010 18:20:12 +0000

Looking around the US economy right now. Homes have been foreclosed, bankruptcy looms on private debts and the retirement 401ks have taken a serious hit. Life as we knew it has been turned upside down without anything in place to catch us as we fell. So how did we get into this mess? The economists tell us we have been living beyond our means. Credit was cheap and, with banks and credit card companies raising their borrowing limits, there seemed to be nothing we could not afford. There was no need for savings. Everything could be charged. If the limit was reached, the housing equity could be released as cash. Over a period of about twenty years, we switched from a country that saves to a country that spends on credit. In the period just after World War II, we had “prudence”. People mostly paid cash for what they wanted and, if they did not have enough, they saved. It was a revolution when, suddenly, everything could be paid for in affordable monthly instalments. In one sense, this is the easiest way to get into serious debt without noticing. When you only pay a few hundred dollars every month, it hardly registers the total debt is tens of thousands.

Insurance companies were the last of the hold-outs. For years, they insisted everyone should pay them a lump sum once a year. Then, slowly, there was a cave. First it slipped to every six months, then quarterly. Now almost every company across the nation accepts monthly. What’s the problem for the insurance companies? Well, they estimate the likely total cost of the claims they will have to pay over the next twelve months and divide that amount between all the policy holders as the premium. If the company has done its sums properly and everyone pays once a year, the company always has the cash in the bank to pay out on all the claims. If people pay monthly, they can easily change to another insurer. They can miss one month’s payment when the family budget is under pressure. That means the insurer may not have enough money to pay the claims. So, to encourage all you people with some savings (or some slack on your credit cards), they offer discounts if you agree to pay every six or twelve months. It gives them more security and saves you some money. Paying monthly costs you the most.

That said, paying monthly gives you flexibility. You can use the online search engines to find auto insurance quotes at the lowest price. Then for just one month’s premium, you can be driving. In effect, this becomes a monthly policy. You can keep shopping around for new premium offers from different insurers. If you find a better monthly rate, you can transfer at the end of the month. But if you pay once or twice a year, the insurer will hit you with high cancellation charges to lock you in. Whatever you might save disappears. Worse, if you change the make and model of your vehicle during the longer policy term, it can be too expensive to move the policy to a cheaper company. You end up paying the higher premium until the six or twelve months end. So make a wise decision. Auto insurance is never cheap. Avoid making it too expensive.