Money Management: 5 Household Budgeting Strategies to Help You Save

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Money Management: 5 Household Budgeting Strategies to Help You Save

Money Management Receipt

Do you see your paycheck disappear just as soon as you earn it? Are your credit card balances rising in an attempt to make it to the next paycheck?

If so, you aren’t alone. In fact, almost 80% of American workers live paycheck to paycheck.

But it doesn’t have to be that way.

When times are tough, it helps to have some money management tricks up your sleeve. Keep reading to learn five household budgeting strategies to increase savings.

1. Review Your Spending Habits

It can be a daunting process to create a budget. The first of our budgeting tips for families is to review your spending habits.

Print out the last few months of your bank and credit card statements. Then, sit down with a few highlighters and color-code all your purchases. Once you’ve categorized all your recent purchases, add them up for a grand total.

We bet you’re surprised by how much your spending on the drive-thru for your morning coffee or on little trips to the grocery store. Figuring out your current spending habits is the first step towards reining them in.

Once you know your recent habits, come up with an appropriate monthly budget. But don’t get discouraged if you break the budget in the first month. It will take some time to create smart spending habits — go easy on yourself.

2. Cash is King 

One of the easiest ways how to manage a budget is with a cash system. Financial advisor Dave Ramsey recommends the envelope cash system.

After you create your monthly budget, separate it into categories, such as groceries and entertainment. Then, at the beginning of each month, place the budgeted amount of cash into each envelope. Throughout the month, spend from these envelopes and watch your dollars stretch further.

The reason? Ramsey claims there’s a more emotional connection to spending cash. Every time you swipe your debit or credit card, you put it back in your wallet, but cash disappears for good. This means you’ll be more careful spending cash when you know you have a specific amount to last the whole month.

3. Decrease Your Debt

All the best money management strategies involve one crucial step — decreasing your total debt.

Think about it for a minute. The more money you spend on debt payments each month, the less of your income you have to spend. Seems easy enough to understand, right?

Many people believe that debt is unavoidable, but that’s just not true. Just like the cash system, Ramsey has coined a pretty simple method for handling your debt called the debt snowball.

This method involves listing all your debts owed, from lowest amount to largest. Using a zero-based monthly budget, pay all your monthly expenses first. Then, with any money left over at the end of the month, make an extra payment on your smallest debt.

Soon, that debt will be paid off and you can move onto the next largest debt. You’ll quickly increase the amount of money available to budget each month.

If you have a pesky debt that won’t stop increasing due to large interest rates, it may be time to consider transferring that debt. This involves getting a payday loan or personal loan to pay off that debt and to achieve a much lower interest rate, saving you money over time. This Bonsai article can help get you started.

4. Increase Your Income

But what happens when you don’t have any extra money at the end of the month to start a debt snowball? Well, that means you need to increase your income.

First, we suggest looking at your main income. Are you earning what others in similar careers earn? If not, either ask for a raise or start looking for a better paying position.

Then, consider picking up a part-time job when you’re not working your main job. You can get a job like Uber or Lyft that fits to whatever hours you have available. Or, consider an online job like a copywriter or transcriptionist, for more freedom.

Yes, no one enjoys working two jobs or picking up overtime, but sometimes it’s necessary. Remember that this doesn’t need to be a permanent situation. As soon as you get some of your debt paid off, you can go back to only working one job.

5. Create Visible Goals

Managing a budget is great, but after a few months, you may find yourself losing momentum. To avoid this, create visual reminders for yourself and your family.

Some people like to use debt payoff charts. These charts separate your large goals into small segments. After every payment, you get to color in a section of your larger goal, showing your progress over time.

Other people get motivated by thinking about what their life will look like after all their hard work. Maybe you want a family vacation to Disney or a new vehicle after your money is in order. If so, create a vision board with images of your goals.

Both of these methods are great. Remember to place your visual reminders in a place you’ll see them often, like your office or your fridge. Get your whole family involved with the visual process to get everyone excited.

Get Financial Freedom with Budgeting Strategies

Using these budgeting strategies, you can help your family achieve financial freedom.

Start by reviewing your spending habits and use cash for the majority of your purchases. Remember that your income is your biggest tool, so find ways to increase your earnings and decrease your debt. And lastly, create visible reminders of your goals to stay motivated.

All of these tips may seem overwhelming right now, but after a few months, you’ll get the hang of it.

For more advice on how to win at life, visit the Home and Family section of our site.

 

 

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