When it comes to budgeting, some people might think it is hard but it is as simple as balancing your expenses with your income. In other words, not spending more than you earn.
Budgeting is important as it allows you to create a spending plan as well as allocate a sum to your savings. Keeping track of your finances and effectively managing your money will help you stay out of debt.
Contrary to what most people believe, budgeting is not solely for people who have their own source of income. In fact, it is better if you teach children how to budget their money, they would not have to struggle as adults and maybe even have enough to kickstart a savings fund they can keep for a lifetime.
Extending your budget out into the future also allows you to forecast how much money you will be able to save for important things like your vacation, a new vehicle, your first home or home renovations, an emergency fund account or your retirement.
Be realistic with your budget and set goals that are achievable. Being transparent with your money to your family will also help you accomplish a long-term financial plan. Be it if you want to partake in this journey together. Be proactive and invite your family to be financially responsible together by enjoying and practising some of these activities:
- Get your children to keep track of their spending. Today, many children receive an allowance for their everyday expenses. One way you can teach children the value of money is by letting them record their spendings in a special notebook. Let your child pick which book she wants. Perhaps you can even decorate it together; just make sure that she uses it instead of leaving it with fresh pages.
- Set Goals. Whether it’s mommy, daddy, or the elder siblings, set financial goals and share them with each other. For example, daddy might want to buy a new car while your daughter might want to visit an amusement park.Brainstorming and goal-setting will motivate you to work with your current financial budget and save up towards this objective.
- Create A Budget Together. Instead of leaving them out of money talks, initiate talking about your family’s finances while everyone is in the room. It will show that you are honest with your money and make your children interested in understanding how finances work.Allow them to help you come up with a monthly budget based on you and your partner’s incomes and overall expenses. You can even try setting a monthly family savings goal and get creative with it!
- Play Banker. Monopoly is a great game to make children understand the role of money, mortgages and being in debt. However, if you do not have the 3-5 hours in your day to play it, you can simply play banker. Set up a scenario where your child has a job he or she would enjoy. Pretend to pay them a salary in the form of allowance or even just play money and they can create a budget by seeing their expenses. It will allow you to bond with your child, discover what he or she likes and also help them understand the importance of budgeting.
- Open a Bank Account. Once you have helped your child save a sum of cash, open a savings account with a bank and let them deposit their money inside and even accrue interest. These funds can later be spent on something that he or she truly wants. Getting your children involved in family finances can be a fun experience. No matter how young or old, be sure to try this out today.
An Emergency Fund is a sum of money we set aside to be used strictly for the following reasons: (1) Loss of job;(2) an Illness (family included) and; (3) Unexpected big-ticket expenses. In other words, a personal safety net in the case of unforeseeable occurrences.
Using a budgeting app will help you calculate and monitor your spendings and investments. If you are unsure how much your emergency fund should be, you may try contacting a professional financial planner or even just downloading this.
Along with many budget apps on the App Store, The New Savvy Personal Finance App allows you to keep track of your expenditure and allocate certain amounts of money into factors such as grocery, dining, bills and mortgage.
By doing so, you are able to see the money going in as well as control the money that’s going out. Making it a habit will help you lessen any unnecessary purchases annually; allowing you to save more than you spend.
Which bank should I store my emergency funds at?
Your emergency fund should be stored in a savings account at the local bank. This is to ensure that it will be as liquid as possible. Next, we should try to earn the best returns on this stockpile of cash and find the bank with the best interest rates.
One such bank account is the UOB One Account. They’ve done a good job with their advertisements around the island – we’re sure you would have noticed. The main benefit of the account is that it provides interest rates of up to 3.33% on your emergency fund.
Additionally, for those of you who are consciously looking to receive rebates on your purchases, the UOB One Card provides up to 5% of rebates and it is complementary to the UOB One Account which will help increase the potential interest rates on the emergency fund.
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