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Friday, February 13, 2009

Making a Family Budget

By Samantha Asher

Whether you've just started a family and are new to the lifestyle, or you have several kids as old as high school age, it's likely your finances could use some help. If you are in debt, aside from a mortgage, you need to make some changes. If you have no retirement plan because you think you can't afford it, you need some help, too.

There are all kinds of debts. Some common debts of families include personal loans, auto loans, credit card debt, and any other types of debt or financing.

In order to pay off your debt, you have to cut back on spending, make more money, or do both. When you have all your debt paid off, you can begin saving an emergency fund and putting more money towards retirement and your kids' college.

By making a family budget, you can adjust your spending to start saving. I call it a family budget because your whole family needs to cooperate to make it work. You and your spouse need to be on the same page.

If you make a budget and your spouse continues to spend more than you planned, your hard work will go to waste. Likewise, if you continue handing cash to your kids whenever they ask, not only will you be wasting more money, but your kids will never learn to work for their money. Make them get a job and start earning their money.

Paying off debt is your first priority. Pay it off as soon as possible and save yourself a lot of money in interest. Open up a 401K or an IRA and start contributing towards retirement. The sooner you start, the more you'll have come retirement. If you set up a 401K with your employer, they might even match a percentage of or the entire amount of what you contribute, which means more free money.

If you feel trapped because you try to cut back and are still living barely within your means, take a serious look at your spending. Are you living in a house you can't afford? Your expenses are never as low as they can be if you can ever downgrade your living. Don't just look at cutting small expenses, also look to shave your big bills down.

Cut back wherever you can. Shop carefully and look for discounts wherever you can. Cut out any bills you don't need. For example, one cell phone for the entire family is more than enough. Do you really need cable? Do your errands all in one shot to save money.

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