Six ideas for getting your family budget in shape
(ARA) - Even though the American economy is showing some initial signs of improvement, unemployment is still high and many families are struggling. When your household cash flow slows and dwindles, it can feel overwhelming simply to keep up with necessary bills and payments. However, it's essential for your family's financial health - now and in the future - that you keep making all your payments. The best way to keep your finances in good shape and identify any shortcomings in advance is to develop a new, clearly laid out family budget.
The better you plan your budget, the better you'll be able to save, recover from unexpected expenses and plan for the future. Don't be intimidated by laying your finances out on the table - it'll help you look for new ways to approach the bills you have to pay every month. Once you get going on your new budget plan, it'll feel natural, and the rewards will benefit your whole family. Here are some ideas on how to get started:
1. Review your current financial situation. There are many things you should consider in this step, including your short and long-term savings goals; your monthly income and expenses; and don't forget your health, auto and homeowner's insurance limits and deductibles. If you don't already have one, make a list of what comes in and what goes out each month and then review the numbers. Some very helpful worksheets to get you started can be found in the guide "Improving Your Finances and Credit."
2. Identify expense categories that are increasing as well as potential areas where you could cut back. For example, if members of your family are safe drivers, what would it save you to raise the deductibles on your car insurance policies? Could you save money by mail ordering prescriptions versus picking them up at the local pharmacy? Is there a cheaper gas station in the neighborhood? You should be sure that your plan allows for your savings to grow and your debt to shrink.
3. It is critical to annually review your current life insurance policies. Did anyone in your household get laid off or have a change in work status in 2009? If so, was there a reduction in your household's group coverage? Reviewing your policies will show any gaps in your life insurance coverage to cover expenses and income replacement if something were to happen to you or your spouse. For helpful tools on how much life insurance coverage you need, go to SBLI of Massachusetts' on-line Learning Center.
4. Once you have completed the above three steps, set goals to improve any areas that are falling short and develop a schedule to address each. For example, if you can afford to increase your deductibles on your car and home policies, you can increase your savings contributions with the dollars you save. Perhaps the monthly savings from a credit card that was paid off in 2009 can help purchase that additional life insurance coverage you identified. Adding to your insurance coverage with affordable, high quality term life insurance is a smart strategy. Visit www.sbli.com or call (888) GET-SBLI for more information on affordable term insurance and a free quote.
5. Now create a new 2010 budget based on the assessment you performed in steps 1-4 above. You may find that it's not possible to address all of your newly identified goals immediately. Small steps in the right direction are a great start. Set interim goals for yourself to keep you on track.
6. You should review your finances at least quarterly to be sure you are meeting your interim goals. You should also give yourself incentive rewards if you find you are on track. Something as inexpensive as a movie or a dinner out can help soften some of the sacrifices you have been making in order to accomplish your goals and can help motivate you to keep doing well.
No matter what your financial situation is, it's important to establish a family budget. Not only will it help you to overcome financial challenges and make the most of any surpluses, it provides an excellent example for your children. And, over the years, the habit of fiscal responsibility is one of the most important lessons you can pass on to your kids.
SBLI and The No Nonsense Life Insurance Company are registered trademarks of The Savings Bank Life Insurance Company of Massachusetts, which is no way affiliated with SBLI USA Mutual Life Insurance Company, Inc. NAIC #: 70435. SBLI products may not be available in all states.
Courtesy of ARAcontent