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My parents didn’t teach me about managing my finances very well. I was on my own by the time I was 17, so I had to learn myself and by trial and error.
A LOT of trial and error. In the beginning of my relationship with my checking account, I used to go by the balance that I was given when I called the bank’s 800 number. What I missed was the concept of “pending charges”. Needless to say, I overdrafted when I was younger. I overdrafted several times, once to the tune of nearly $400.00.
As I got older, I learned my lesson when it came to overdrafting. The more you overdraft, the more fees the banks charge you and before you know it you’re up to your ears in overdraft fees. I’ve tried many different methods of managing my fiances and balancing my family’s budget, ranging from keeping a ledger and every single receipt to tracking only from online banking. I’ve set aside money for certain bills, and figured out exactly how much expendable income that I have each week. In our younger years, Josh and I had loads of expendable income. Now? Not so much. We do have some, but we used to just blow money like crazy. Movies, dinners out, drinking.. I marvel (and cringe) and how much money we just wasted before we had kids.
I’m still not great with saving. I have been trying to better my spending habits a little at a time. I know exactly how much I need to pull in each week to cover our expenses. Now, if I make more than that set amount I take 5% of whatever my paycheck is, I put that 5% into our savings account. It may not seem like much, but it will add up eventually!
I think the biggest thing that’s helped me is creating a spreadsheet of our monthly expenses versus our income and using a formula to decide exactly how much we have to “play” with each week. This helps me keep track and not get in a tight bind when the end of the month bills come around. I’ve thought about taking that concept a step further and each week, taking out what we’re allowed to spend on things other than expenses out in cash so once that’s gone, I’m not tempted to just charge that Starbucks I want on my check card. If the cash isn’t there, then neither is the latte.
I know that as I get older I will learn better and more effective ways to manage our family’s money, and hopefully I will be able to clearly pass those skills down to my children so they don’t find themselves scratching their heads the first time they try and balance their checkbook. I’m not perfect, but I’m learning!
What are some tips that you have for managing a family budget?