Are your family finances complicated....

If you’ve ever wondered where your money goes, or why you always seem to spend your salary before pay day, you could consider budgeting.

There’s lots of help available to do this, for instance, here are some useful insights from Legal & General and the Rough Guide’s “Rough Guide to Family Finances”:

You can budget on a weekly or monthly basis. To begin preparing a budget there’s two things you need to know, what’s coming in and what’s going out. If your outgoings work on a different timescale, perhaps you get paid weekly and pay your council tax monthly or annually, make sure you leave enough aside to meet the bill when it’s due.

The simplest way to budget is using pen and paper, making a list of your income on one side and outgoings on the other. Alternatively, you could use tools such as Microsoft Excel to set up a simple budgeting spreadsheet, or the Money Advice Service has a useful online budgeting calculator.

Your budget should include:
- Rent/Mortgage
- Household bills
- Food
- Tax/NI
- Travel Costs
- Spending on children
- Social/Leisure Activities
- Holidays
- Birthdays and other celebrations
- Ad-hoc, but necessary spend (i.e. children’s school trips/uniforms, unexpected bills)

Don’t leave anything out of your budget, for example, when working out your car costs it’s not just keeping up monthly repayments or fuel costs. You’ll have insurances, taxes, maintenance and servicing costs to also include.

The key to budgeting is making it work for you and your family, ensuring you take care of your essential spend (your rent or mortgage, food and bills). No one likes having to go without the fun things but losing your home or your health can have long-lasting effects that can be damaging for all the family.

Legal & General’s research shows that for many families, children have a significant influence on household spending, with two in five parents (43%) admitting their children influence the budgeting, and one in ten (10%) saying they give in to pester power to keep the peace. Only 2% of parents say they’d be willing to cut down on their children’s extra-curricular activities if they experienced a long term cut to their income.

It seems obvious that you can’t spend what you haven’t got, but with the availability of credit cards and pay day loans, you can end up spending far more than you can afford. This could land you in a debt spiral, as you borrow more to buy essentials.

Having a good, flexible, budget helps you stay in control. It helps you prioritise and manage your spend.

This article should not be considered as advice. If you do wish to seek advice, you can visit your local Cumberland branch, call 01228 403141 or visit www.cumberland.co.uk to make an appointment with a financial planning consultant.
You can also get your free copy of the Rough Guide to Family Finances through the Cumberland.

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