Are you looking for effective household budget tips to start the year right?
The past few years have been tough for a lot of people. The pandemic swept through the world and it is still putting some countries on the edge in trying to contain their COVID cases. But we have come so far in terms of reviving the economy compared to the first months of the pandemic. From lockdowns and filled-up ERs to businesses starting to open again.
This also means that for most people, their finances are starting to recover as well. It can be getting your old job back or being hired by a new company. You could also be re-opening your business and seeing old customers coming back. This also means that your budget could be getting back to what it used to be before the health crisis.
That being said, keeping in mind some household budget tips could give you an edge in planning your finances for the new year. What’s more, the challenges of the past year provided incredible financial insights. It helped a lot of people see and realize the importance of managing your finances well to get through challenging times. US News even shares that financial lessons the past year made people budget better.
The start of a new year is a great time to reflect back on all the lessons you have learned in the past years. These insights can give you an advantage in planning your budget for the year. The lessons you personally had to go through and what you saw in other people can help you budget better for the coming year.
To help you get started, here are a few tips to get you planning for the year.
Prioritize your emergency fund
One of the most important lessons people were forced to go through, whether they liked it or not was the need for an emergency fund. This is one of the household budget tips you need to keep a close eye on which is – you need an emergency fund. Regardless of how secure your day job is or how well your business is performing, you need to set aside money for emergencies.
A lot of people got laid off and several businesses folded up at the height of the pandemic. It’s only recently that the economy is starting to get back to its feet. Even then, some people are still finding it a bit difficult to get back on employment or revive their businesses. This is why your emergency fund is a crucial piece of financial tool you need to prioritize.
The idea for an emergency fund is that it should be enough to cover your monthly household expenses. This is important especially when your income is affected like when you lose your job or when you are on furlough. Your emergency fund will keep you afloat while you figure out how you can get your finances back to normal.
Recalibrate your short term goals
At the start of the year, you could be revisiting your long-term goals to make sure you are on track. You need to make sure that you always keep your sights on your goals. With this, your short-term goals need to help you get to your long-term objectives. But they need to constantly be adjusted to adapt to your current situation.
This is one of the reasons why one of the household budget tips you can focus on at the start of the year is to align short-term goals with your household budget. If your income is back to what it used to be before the pandemic, you can pick up where you left off. If it is still far from what it was, you can adjust your steps accordingly.
The important thing is that you are able to recalibrate and adjust your short-term goals. The crucial part of that is it should still lead you to your long-term objectives. Your small steps should bring you closer and closer to your big targets.
Designate budget work among family members
Times are tough but nobody ever said you have to do it all on your own especially if you have a family. You can get the whole family involved and it could be a great time to teach the kids finances 101. This is a great time to get them involved and help set them up for future financial decisions. It could help them make better money decisions.
One thing you can do is assign a budget item for the older children. You can let one manage your utilities at home making sure you do not go over budget. They would now be checking every light in the room, turning off the faucet, and watching the AC. One child could be in-charge of groceries and could monitor what you put in the cart vs what your budget is for that grocery trip.
This is one of the best household budget tips you seriously need to think about especially if you have a family and children. They might not realize just yet but they will thank you for the lessons they will pick up in managing a household budget.
Easier said than done but this is one of the household budget tips you will hear often. One of the reasons is that it works if you can pull it off. A lot of people stop before they even begin simply because it seems like an impossible task. Most households are already on a tight budget and lowering expenses seems an improbable thing to do. It does not help also that CNBC shares that about 26% of Americans believe their finance will get worse.
One idea is to make it as fun as possible for you and for your whole family. You can make it into a weekly challenge or even gamify it. You can start a “No Spend Sundays” where you and your family find creative ways to not spend anything for one day. No take out or delivery, no online shopping, or anything that makes you spend money.
A “cook-off Wednesday” could be a team game where you get your children to help you cook. This way, you stay away from ordering take-out and make sure the food in your fridge doesn’t just spoil. You also get to spend quality time with your family and kids. You can make up new names and start new family traditions which could be fun and help you save money.
Work with lenders
If you are managing your payments, one of the household budget tips you can look into is working with and reaching out to lenders. This works well especially if you have great payment history or your credit score has significantly gone up. This is great leverage to ask for ways to lower your monthly payment like a lower rate.
You might also be eligible for a 0% credit card and you can use that for debt consolidation. This can help you save a lot of money as you pay back your debts. Just make sure that you stay on top of the promo period. After this, the interest rate normally goes up so you better keep tabs on that specific date before it happens.
Increase your income
It is not that easy to increase your income but definitely not an impossible task either. You might easily give up if you try to bump up your income by a wide margin at the very start. The idea is to take on small increases so you can have doable concrete steps to take. It can be putting in a few hours of extra work a week to taking on work-from-home tasks at night.
Once you get the hang of it, then you scale up and figure out a way to increase your extra income. You can explore income-positive hobbies so you get to spend time doing what you like while earning from it. If you love to write, you can take writing or even editing jobs at home. If cooking is your forte, you can create online cooking content or even sell recipes for people to follow at home.
There are a lot of household budget tips you can look at to start the year. The important thing is that it aligns with your goals and objective for the year as well as your long-term goals as well.