Having children can be expensive and sometimes every penny can count. That’s why saving money can be really important. In this article, we’ll give you some great tips to help you out and make money less stressful by starting a budget.
Saving money can be vitally important for a lot of parents. You can go from two pay packets coming in down to just one or reduced income for several months. For single parents, it can be even harder. At times it can be stressful and children may even seem like a financial burden when they are supposed to bring you joy.
What’s more, money worries can also cause a lot of tension and arguments between you and your partner.
The cost of a baby can be bigger than a lot of people realise. Thankfully there is a light at the end of the tunnel. We’re going to cover how to make life easier so you can see that light at the end of the tunnel.
The first key to saving money and getting rid of that stress is starting to budget. When we say budget we mean a fully writen down budget so you know where your money is going. When you first start budgeting some amazing things happen;
- You realise how much money you were wasting and where
- The stress disappears
- ‘Too much month at the end of the money’ becomes a thing of the past
- Money can seem to magically appear
- If you had been burying your head in the sand, you find it’s easier to take it out of the sand.
Saving money by starting to budget
We know it can be pretty daunting when you first start budgeting, but we promise you, once you get started it can be a massive weight off your shoulders. So here are our ideas for you to get started with budgeting so you can start saving money.
1. Budgeting with your partner
Budgeting works so much better if everyone is on the same page, so it’s best to get your partner on board. If you’ve got older children get them involved too, it can be fun for them, like a game. Furthermore, if they’re the type to pester you for things, trying to spend your cash, you may find they stop. You may find it useful to get your most recent bank statements too.
2. Write your budget down
Start your budget by grabbing a pen and paper and writing down your income and all your outgoings each month. Start with the big stuff that you really can’t do without or miss. Rent and Council tax, Food, Utilities (including gas, electricity, water, phones, and your internet), and your Transportation costs. When writing this down it’s best to have 2 columns one for the monthly cost and another for the yearly cost.
3. Sinking funds
Next, you want to work out other costs that you spend throughout the year. The Things in this category are Christmas, Holidays, DIY/ Garden and other House stuff (Insurance and furniture, etc.) and Family costs such as birthdays and celebrations and going out. We call this section Sinking funds.
Sinking funds is the money you put away for future costs and are an important part of your budget. They help you to not use credit for things you know or expect will be coming up. Firstly you need to think of all the events and items that you will need over the next year and the total cost. Once you’ve added that up divide it by 12, you then have the figure you need to save into each sinking fund each month.
Many of us are surprised by ‘events’ that we know will be happening and the default position can be to just put it on a credit card then pay it off. It’s much better to save for events or items and therefore reverse the trend. Christmas can be so much better when you know you’ve not got to pay the credit card off in January.
It’s well worth having two sinking funds for your child, you’ll want one for costs like buying car seats, pushchairs, and other future costs. The other sinking fund would be for unexpected costs that may come up if something gets lost or broken.
4. Work out your TIFTBF
You then want to work out what I call a TIFTBF fund or ‘Things I Forgot To Budget For’ – when you start out on your budgeting journey, you’re going to forget a couple of things so this will cover it. Also, things change month to month, an expected bill may cost a little more for instance.
5. Emergency fund
Finally, when working out your budget you want to allow for an Emergency Fund. Start putting away some money into your emergency fund for…..well…emergencies. Put away as much as you can each month, the sooner you build it up the better. Emergency funds cover things like car repairs, replacing a boiler or other appliance.
It’s better than putting it on a credit card or having to get a loan and paying interest on it. You want to save at least £1500 to start with and have a goal of around 6 months worth of income! This is helpful if you find yourself unable to work. Also, you want to put this money somewhere you can get at it quickly, say within 24 hours Maximum. You don’t want to lock it away where you can get it for 3 months.
6. Tools to help with budgeting
There are lots of ways you can do your budget. You could do it the old fashioned way with just pen and paper. There’s also plenty of online budgeting tools and apps too. A Spreadsheet like Excel or Google sheets.
Many banks are helping with budgeting now too. We love the new online bank Monzo it’s app-based but way ahead of the traditional banks. They’ve made it so easy to see where your money is going with monthly reporting. The best feature has to be pots, so you can segregate your money into your costs, sinking funds, and your emergency fund.
Just doing a budget will help you save money if you stick to it with some discipline. You’ll have a clear view of where your money is going and where you can save some of that money. In some ways, it’s like magic, when you start focusing on your budget. Your money starts flowing in rather than flowing out.
You’ll find ways to save on your grocery shop. Look at your household utilities and save money there. You might start selling some things you don’t need anymore on eBay. There are lots of ways to save extra money. You can then use that money to build your Emergency fund quicker and build those sinking funds.
A word on dealing with debt
If you’re in debt and you’ve not had a child yet, but are planning to, then it’s a good idea to clear your debt before you do. If you can’t do that then at the very least clear as much of the debt as possible. It’ll be one less thing to get stressed about.
If you’re expecting or already have a child or children, you really need to go to work on your budget As Soon As Possible. Being debt-free except for your mortgage really makes life easier, especially if you’re on a reduced income. A written down budget can really help you to find extra money to put towards clearing your debt.
If you are or you’ve started struggling with debt then DO NOT put your head in the sand. Putting your head in the sand does not make it go away, it’ll just make it worse! Check out the Money Advice Service or give them a call on 0800 138 1677 and get a plan in place. They are open Monday to Friday 8 am to 6 pm.
Let us know how it goes
If this article has inspired you to start budgeting and you found it helped, we’d love to hear about it, let us know in the comments below.