I recently heard that the Today Show ran a segment called Save a Little where they predicted the average household spends $3,500 annually for insurance and $550 a month for food. I’m not sure if that figure was for health insurance or auto insurance but I can say that I WISH our family only spent $3,500 annually on either types of insurance. These estimates made me take a look at our own budget.
There are some steps that you can take to set a budget and stick with it so that you make sure everything gets paid for in the month.
First, determine how much money you bring into the home each month. Consider all income, even that which you might only get once a month. If your income varies, base the budget on a lower amount so that you don’t plan to have money for a bill and end up not making enough. It’s better to predict a lower amount and have money left over for savings or a fun day out.
Look at your spending habits. This can tell you a lot about where your money is going. You will be able to see where you can cut money from in order to save money or put it towards retirement or savings for vacation. Try not to cut everything that’s fun from your budget because your family does need to do something that gets them out of the house or that provides some kind of excitement.
When you know how much money you have to spend, you might find that you need to cut back on some bills or decrease your payments. Check various auto insurance quotes to see if you can find something that offers discounts for multiple drivers. If you have a car that is paid off, then you might not need the extra coverage that you had when you were making payments. Until I looked at our budget I actually forgot that we can cut back on our auto insurance now that we are married. So my goal this week is to determine which insurance company is the best for us to combine our policies.
Set a savings amount that will automatically go to an account so that it can be used for emergencies. Try to find an account that will gain interest each month so that you have extra money instead of only what you put into the account.
I realized when we started the process for building our new house that my credit needed improvement for lack of credit. I am real big on spending cash and not running up debt. Although I own a couple of credit cards I always pay them off right away if I use them. Limiting the number of bills you have will make sticking to a budget much easier.
Set priorities of what needs to be paid first each month, but make sure you have money set aside for clothing and things that might come up like school activities or issues with the car.
The next thing I need to work on is our monthly food bill. We have a large family and love to get out of the house. After looking at where our money goes each month I can easily say it goes mostly to food.