The importance of having a family budget

Why having a family budget is important

Have a look at some of the benefits of having a family budget and which apps you can use to start budgeting. 

Family budget
Family budget /iStock

The thought of budgeting can be daunting, but the truth is that planning your finances will do you more good than harm. It makes you accountable for your spending and puts you in touch with the realities of your finances. 

Many families live paycheck to paycheck. However, the COVID-19 pandemic, which hit the world two years ago, has made us realise the importance of being financially stable.

One of the best ways of getting our finances in order is through having a budget and sticking to it. 

If you are married or have kids, it goes without saying that a family budget is crucial. Budgeting allows you to track how much money comes in and how much money goes out. It allows you to have an honest evaluation of your finances, look at ways in which you can pay off debts, and even save for rainy days. 

READ: Money tips for young people

Without a budget, it is easy to lose track of how your money is spent. 

According to the Very Well Family website, there are two types of family budgets: the envelope budget and the 50/30/20 budget method. 

Envelope Budget allows you to put money in an envelope. The feeling of seeing physical money go towards paying or buying something is not the same as when you just swipe. So, many people tend to be more careful when they have to give away cash instead of using a card. Families would decide on how much they want to spend on certain things and then put the money for those activities in an envelope.

There is also the 50/30/20 budget method. This type of method allows you to put 50% of your income for needs and essential bills like insurance and bond/rent, then 30% goes into wants (fun or luxury spending), and 20% into savings or debt.

Depending on where you are financially, at the beginning of your budget days, you might not have enough money to save or even have 30% towards funding your fun activities. However, as you stick to your budget and finish paying off some debts, you will have more money to allocate towards savings and fun activities. 

To budget, check out some of these free budgeting apps - Personal Capital, Mint, and Honeydue. 

READ: Interior Design with Margaret Rose: Decorating your home on a budget

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Image courtesy of iStock. 

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