New parents will soon discover that budget planning is essential to maximize financial resources. A well-planned budget goes a long way in making sure all the essentials a family needs are taken care of. There are many considerations when making a financial plan, and it will vary from one household to the next. There are however, some fundamental principles to bear in mind when anyone sits down to make a budget. An average household budget cycle is typically one month. Here are some guideposts to always live by when stretching a budget.
Variable And Fixed Expenses
In any budget, one must remember that there will be two kinds of expenditures. Fixed and variable expenses. Examples of fixed expenses are your phone bill plan, a mortgage, the monthly cable TV subscription, or any other bill you pay that is monthly recurring with a static amount.
On the other hand, a variable expense example in your budget would be the grocery bill, the electric bill, gasoline expense or any additional amount that is also recurring monthly but varies depending on your needs and habits. Fixed costs are non-negotiable, so always be careful when you take on something that will be recurring monthly with a constant amount. Variable expenses, on the other hand, allow you to adjust, depending on your lifestyle requirements.
Needs And Wants
Another pair that you will hear when the subject of a budget comes-up is needs and wants. The rule that applies here is, always ask yourself before any purchase: Is this something we or I need? Or is this something we or I want? A want or need is not necessarily better than the other, but needs to take precedence over wants. Any budget-wise couple will make sure that only when the needs have been taken care of, can some wants then be indulged in.
Other Budget Tips That Save A Bit Here And There
Here are a few specific budget tips that save a little bit. However, when you add things up, you might be surprised how much you saved.
Eat Out Less Often.
Restaurants are a nice treat but don’t overdo it. A well-prepared home meal costs much less, which you could also pack to work to minimize daily expenses.
Try Buying Pre-Loved.
There are many second-hand platforms where you can purchase items you want or need at a fraction of cost compared to retail. Your budget will go a long way.
Plan Daily Trips
When you go out using your car, plan it in such a way that you go to places you need to that is in the same general vicinity. This way, you economize on gas by having fewer trips.
Track Your Expenses
To be on top of your budget, you should keep a tight watch on how money is spent. The best way to do this is by keeping all receipts so you can balance your expenses against money on hand.
The 20% Rule
Finance experts always advice that one should set aside 20% of their monthly income for a rainy day. This money is supposed to tide you over for six months to a year, in case you lose your job. It gives you breathing space while finding new work.
Be Wary Of Bargains and Sales
Do not be lured by mark-downs and sale items because studies show that impulse buys happen mostly during these marketing events. How many times have you purchased something you don’t need, just because it went on sale?
These are just some tips that should help new parents stretch their budget. There are many more tips and tricks that can help you spend wisely. At the end of the day, spend prudently and budget with common sense.