Smart spending is a practical approach to handling the family’s finances. It is also a great practice to pass on to your children.  Some things you can do to raise a family on a budget really boils down to a lot of practicality and common sense. For me, it is all about knowing what the important things are- the things you need, the things you want, and the things you can live without.

First, it would be good idea to look at where you are living or where you want to live. Live in a house you can afford.  Ok, it might not be the house of your dreams just yet but you will be able to reroute the money to other items that are more important at the moment.  I live in a small townhouse with reasonable rent and it is not the house I want to stay in forever but it is more than enough for my two kids.  They feel safe, happy, and comfortable here and that is great.

Make sure to limit wastage of any kind. I really try to live by this. Switch off lights when not needed and limit the use of electricals when you can.  I live in a tropical country so it is often important to have an air conditioner at home.  The use is timed though, very strictly. And during cooler months like now, we use the ac to cool the room rather then use a ventilator.  This really cuts down the electicity bill.

If you own two cars, consider having just one.  If you are going to purchase a car, do this on a cash basis so you don’t have installment payments with interest to look after in the coming months. You may have to buy a second hand car but this will be good enough to get you to where you need to go. I do without a car at all. I use public transportation and I find that this is saving me money even if it is harder.  I plan to get a car but only when I can afford its maintenance and gas prices.

Start every year with a budget. I’ve blogged about this ad nauseum but I really think budgeting is essential. Be sure to include occasions like birthdays and Christmas, where you are sure to spend a bit of money.  But when these occasions come, stay within your budgeted amount. Remember, it isn’t the cost but the thought that counts.  This is an important lesson your kids will learn as well.

Live on cash.  I really advocate this.  We do not need to focus too much on credit here, unlike in other countries, so this is really easy to do.  But, if you must use your credit cards, pay them all off every month.  If you only have your house to pay off, you will have a much easier time.

Finally, forgo repeated extra expenses like outings and meals outside. Include these in your budget but remember that you don’t always have to spend to have a good time.  A home-cooked meal and a rented DVD, a treasured story book from the library, other good books and toys from garage sales, an afternoon picnic in the park are all things and activities that cost very little money but make for wonderful teaching moments and warm memories with the kids.  Plus, think of all the money you can save for a college fund!  My kids enjoy watching Barney on YouTube in my room as the movie of the night.  They also enjoy simple sheets of stickers and pieces of candy as great prizes.  Raising kids to like simple things helps make a budget work as well.

Now, raising a family on a budget isn’t easy. It is often very hard to resist buying that thing you have been eyeing but not really needing or giving in to the times and getting a computer game or something similar for the kids.  But resisting has made a tight budget work for a small family.  We are better than ok. When you see how well your kids are learning about the value of resources and how happy they will be with what you are providing, you will feel satisfaction unlike anything else ever.  I hope to increase my earnings to have a bigger budget, of coursr, but I am so grateful that I can provide what I am providing now.  It’s something to feel proud about, in my opinion.

Thanks for reading!

Cheers,

Vicki

I don’t know about you but I always like to sit down and plan things as best I can and as early as I can. I find this is really important, especially as a single parent.  Since I’ve started planning my year, I’ve been able to keep my budget and time in check .  Here are some tips that you might find helpful.

According to E-Home Fellowship,

A good budget is a spending plan that includes everything you will spend money on and stays within your income.  A wise budget includes everything you will spend money on, savings for a ‘rainy day’, savings for large purchases, giving, savings for kids, and investment for retirement and still stays within your income.

I think it is important to do this activity at the start of the year as it sets your expectations and gives you an idea bout how to deal with the coming events over the year.

Tip 1: Get the whole picture.  Start by collecting all checking account and credit card statements for the last year. Hopefully, you will have limited this or, as I have done, stuck to a strict cash or debit card only rule. Note any and all expenses you regularly make. If you keep receipts, this will help you a lot.  If not, maybe you should start for recording purposes only.

Tip 2: Record the whole picture.  Use all the stuff you collected to record a ‘picture’ of what you spent last year. This might be deperessing or not but this is important to give you a good basis of comaprison for the next budget.

Tip 3: Make sure you don’t double-list items.  Check off the lines on your documents as you account for them in a budget item.  this way, you also do not forget anything.

Tip 4: Note your net monthly salary, combined with any extra work you might be doing as well.

Tip 5: Create a monthly expenses worksheet.

Tip 6: Create a worksheet for non-monthly expenses like Insurance.

Tip 7: Include everything you regularly pay cash for in the Cash Budget-Monthly section.

Tip 8: After you total everything, you may be surprised to discover your expenses are larger than your income.  This happens to everyone so do not fret.  If you have a larger income figure than your expenses however, place this amount in your savings.

Tip 9: Review your budget worksheet. Check if you’ve listed expenses accurately then look to see if you are being too excessive with some items. Also check those items you anticipate will increase within the year and make your adjustments.

Tip 10: Try your best to have an emergency fund that equals around 6 months of your net income. After you’ve saved this amount, you cans start investing anything over.
After doing this you will find that you will be relieved to have a better picture of how your year will play out financially. While this is never a sure thing and while plans ALWAYS deviate in some way, you will probably stick to this basic picture for the next 12 months.  You can also use this to plan anything extra you might want to do to earn more or to plan for points in the year when you know you will need to spend.

However you decide to go, let’s make 2011 a better year and the start of a better-budgeted decade.

HAPPY NEW YEAR!

VICKI