When you are starting a family and trying to save money to build a nest egg, it can feel like an uphill battle. Monthly expenses can be steep, and unexpected bills such as car and household repairs can sabotage the budget. When times are tough, it may seem as though saving money is impossible. For young people who are navigating the expenses of raising a family, setting aside money for a home and retirement may seem impossible.
However, wise financial planning starts with a solid understanding of your incoming and outgoing funds. Here are some tips to get started.
Prior to developing a budget, it is important to recognize your spending patterns so you can create a plan that works. List all your expenses, from utility bills to subscriptions and medications. It is crucial that you list even the smallest of outgoing funds, as these add up over the course of a year. To get the most accurate findings, use an average from six months of billing cycles. An easy way to access this information is to visit your banking website for a full listing of outgoing funds for each month.
Most people have spending habits that could use improvement. Identifying your necessary changes can help you make financial goals that will stick. Do you notice a trend of over-spending in certain areas? Sometimes online shopping apps and impulse purchases are spending pitfalls that need adjustment. Committing to better fiscal habits will get you closer to financial security.
As you begin your budget process, make sure you and your partner are on the same page and working toward the same goal. Developing unified savings goals can help families direct their money in coordinated ways and can reduce financial conflict. Examine your spending habits and where your money has been going for the past six months.
Look for spending categories that could be pared down or even eliminated. If you have a gym membership that you never use, consider opting out to save that monthly expense. Unused subscriptions can be cancelled, and entertainment budgets can often be scaled back. Be sure to allot money in your budget for fun and look for ways to make the most of your finances.
While you may eventually want to invest in marketing consultants, for now it pays to take advantage of free resources. For instance, you can save a bundle on marketing simply by doing most of your advertising over social media, as well as using a free logo design tool to connect with your customers. Likewise, you can save money on accounting simply by using Google for spreadsheets, word processing, and file-sharing.
As you create your budget, look at it as orchestrating your funds toward their best purpose. Add a savings category into your plan that is off-limits for withdrawals for at least one full year. Setting a boundary for yourself in this way can prevent impulse spending or withdrawing the funds for reasons that do not align with your ultimate long-term goals. Often a compelling goal for couples is home ownership. Create a line in the budget for a down payment on a home as well as other specific goals.
Many young couples wish to save money for a home. Often mortgage companies will ask for a percentage of your loan request (often 5%) as a down payment. Banks offer better interest rates to people with a good down payment, which can result in lower monthly payments over the course of the loan. Make sure you research varying loan types prior to agreeing to a particular plan, since there are pros and cons to each type of mortgage.
Setting aside funds for your child’s college education is another great financial goal. You can invest in plans that are specific to college savings, and these can yield better results over time than traditional savings accounts. As your child grows, teach them the value of establishing a budget, creating financial goals, and saving money.
Retirement savings is a crucial requirement for a budget line, and a financial planner can easily help you strategize for this type of long-term savings. However, this isn’t something you should put off until you’re older. Tap into your company’s 401(k) match right away if you haven’t already, and consider opening other retirement accounts. If you’re already a part of your employer’s 401(k) plan, look into maxing out your contributions for the year.
Finally, depending on your circumstances, you may be in the perfect position to start a side business to help generate passive income that you can put toward savings. Ideally, this is something you can comfortably handle while still maintaining your regular job, though there’s always a chance that your business will take off.
When mulling your options, keep in mind there are plenty of opportunities out there for a business you can run in your spare time. Whether it’s dog walking, reselling items on eBay, tutoring, affiliate marketing or even becoming a blogger. What’s important is to tap into skills you have or to provide a service that fills a growing need. The last thing you want is to launch a business that puts you into debt.
Surrounding yourself with financial security takes time, patience, and dedication. But if you follow these tips, before long you’ll build a nest that can weather any storm!
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