Smart spending is a practical approach to handling the family’s finances. It is also a great practice to pass on to your children. Some things you can do to raise a family on a budget really boils down to a lot of practicality and common sense. For me, it is all about knowing what the important things are- the things you need, the things you want, and the things you can live without.
Make sure you can afford your home
First, it would be good idea to look at where you are living or where you want to live. Live in a house you can afford. Ok, it might not be the house of your dreams just yet but you will be able to reroute the money to other items that are more important at the moment. I live in a small townhouse with reasonable rent and it is not the house I want to stay in forever but it is more than enough for my two kids. They feel safe, happy, and comfortable here and that is great.
Make sure to limit wastage of any kind. I really try to live by this. Switch off lights when not needed and limit the use of electricals when you can. I live in a tropical country so it is often important to have an air conditioner at home. The use is timed though, very strictly. And during cooler months like now, we use the ac to cool the room rather then use a ventilator. This really cuts down the electricity bill.
Do you need that car?
If you own two cars, consider having just one. If you are going to purchase a car, do this on a cash basis so you don’t have installment payments with interest to look after in the coming months. You may have to buy a second hand car but this will be good enough to get you to where you need to go. I do without a car at all. I use public transportation and I find that this is saving me money even if it is harder. I plan to get a car but only when I can afford its maintenance and gas prices.
Start every year with a budget. I’ve blogged about this ad nauseum but I really think budgeting is essential. Be sure to include occasions like birthdays and Christmas, where you are sure to spend a bit of money. But when these occasions come, stay within your budgeted amount. Remember, it isn’t the cost but the thought that counts. You should also set priorities with your budget, such as funding a college or a custodial account for your kids, and saving for your own retirement. This is an important lesson your kids will learn as well.
Live on cash
Live on cash. I really advocate this. We do not need to focus too much on credit here, unlike in other countries, so this is really easy to do. But, if you must use your credit cards, pay them all off every month. If you only have your house to pay off, you will have a much easier time.
Finally, forgo repeated extra expenses like outings and meals outside. Include these in your budget but remember that you don’t always have to spend to have a good time. A home-cooked meal and a rented DVD, a treasured story book from the library, other good books and toys from garage sales, an afternoon picnic in the park are all things and activities that cost very little money but make for wonderful teaching moments and warm memories with the kids. Plus, think of all the money you can save for a college fund! My kids enjoy watching Barney on YouTube in my room as the movie of the night. They also enjoy simple sheets of stickers and pieces of candy as great prizes. Raising kids to like simple things helps make a budget work as well.
Now, raising a family on a budget isn’t easy. It is often very hard to resist buying that thing you have been eyeing but not really needing or giving in to the times and getting a computer game or something similar for the kids. But resisting has made a tight budget work for a small family. We are better than ok. When you see how well your kids are learning about the value of resources and how happy they will be with what you are providing, you will feel satisfaction unlike anything else ever. I hope to increase my earnings to have a bigger budget, of course, but I am so grateful that I can provide what I am providing now. It’s something to feel proud about, in my opinion.
How do you save money to raise your family?