Let's admit it, we are all faced with those unexpected expenses, perhaps your car breaks down, you or your children get ill, you may have a roof leak, legal bills or the hot water stops working. For whatever reason, we sooner or later can find ourselves in debt. There is something we can do about it. For instance, we can set up a budget.
A budget is a very important tool in managing your finances. It will also help you stay in control of your spending. Once you have established a budget and keep yourself on track, you can then start thinking about saving for that one thing that is sure to throw everyone off. What is that you ask? An emergency, you need to create a family emergency fund. But, first, let’s create a budget.
Now here is an idea for your entire family, get them involved, keep a "Spending Log" of all money spent, no matter what the amount, you would be amazed where it really goes.
Go to the dollar store and buy a cheap notebook and make this your log. You may even wish to use your computer using Excel. Give each of your children a small notepad, that way they can write all they have spent. Make sure, since they can forget easily, they log what they spent when they come home. Keep this log for a week, and then look through it and mark the items purchased that were a necessity.
After, you can add up the items that were not necessities. By doing this, you can see just how much you could have saved. For example, did the kids need those $3.50 milkshakes, did you must have your nails done, did the kids need those new toys, or even gum?
You may find that because the family is being asked to be conscientious about how much and where they spend their money that you could be surprised at how well they actually do. You can even make it a game, offering a reward for whoever spends the least.
After doing this, you will be able to make adjustments on your spending and set realistic and clear goals about how much money your family could save towards your family emergency fund.
To set up a family emergency fund, set aside change or a specified amount weekly or monthly in a separate account. It really does not matter how small your monthly contributions to the fund might be, it will soon add up.
So when the car breaks down, or the refrigerator, stove, or leaky roof sneaks up on you, you know you will be able to take care of it with ease. And then start your saving all over again. This truly is the best idea in budgeting.