Creating a household budget is a sensible and simple way to help allocate your hard-earned income towards your expenses. It can help you save money for a vacation or a big purchase, but can also help to create a safety net to protect against the unexpected like being between jobs or finding yourself with a big expense like a car repair.
Here are seven tips to ease financial stress:
- Set savings goals: Putting aside money for something you really want or need, whether it’s a new car or a tropical vacation, is one of the best ways to save. Daydreaming about your vacation photos is a great incentive and motivation to save your pennies. Determine if your savings goal is long or short term – small, short-term goals are best for something fun and rewarding, while long-term goals like saving for retirement or your child’s education may require more planning. Consider consulting a financial planner for guidance with your long-term savings goals.
- Build up your savings account: Add as much as you can when you can. One easy way to add to your savings is through automatic transfers from your paycheck – even 10% of your biweekly pay can add up quickly. Another way is to add to your savings little by little throughout your week – make your daily latte at home, but transfer five dollars into your savings as a payment to yourself instead.
- Pay down debt: Managing debt can be overwhelming under any circumstances, especially when faced with grocery expenses and other bills. Make a habit of making at least the minimum monthly payment on your credit cards and other outstanding loans until you’re able to afford making larger payments. If you’re having difficulty paying the minimum, some card issuers may offer relief programs, so check to see if you are eligible. Additionally, cut down on using your credit card for the time being, if possible – limiting or eliminating usage can prevent debt from piling up.
- Reduce your energy bill: Simple things around your house can significantly alter the cost of your energy bill. Unplug chargers and adapters when not in use, and set your laptop to an “energy-saver” setting, which adjusts the brightness and battery power. Using cold water instead of hot on your laundry cycles can also help to reduce your bill. Turn off air conditioning and heat when you don’t need it, and check that your appliances are working properly to avoid wasting energy.
- Prepare home-cooked meals: Nothing is quite as satisfying as enjoying a home-cooked meal. Cooking, as opposed to going out to a restaurant or ordering take out, is a simple way to save money. Try to plan a weekly menu to set your shopping list and avoid extra trips to the grocery store. Cooking with family or friends can be fun, and preparing meals in advance allows you the convenience of a quick meal, saving you money that otherwise might have gone to purchasing fast food.
- Evaluate recurring and nonessential services: Subscription services provide the convenience to shop, stream videos, exercise and more. However, their “set it and forget it” payment model makes it easy to pay for things we may have grown bored of or no longer use. Review your bank statement to see what’s automatically deducted from your account and then give your subscription services a “Marie Kondo” – if it brings you joy (and you use it regularly), keep it. Chances are, if you haven’t used it, you don’t need it. Don’t forget about any annual subscriptions you may have, such as magazines and phone apps.
- Shop your auto insurance: Insurance rates change periodically, so reevaluate your policy at least once a year to make sure you’re getting the best rate. Speak with your insurance agent to ensure you have the right amount of coverage to protect you in the event of an unexpected loss, as well as determine if you qualify for any discounts to save you even more money.
Take advantage of your extra free time to get your finances squared away. It can help put your mind at ease and better prepare you for financial freedom in the future.