When it comes to budgeting, some people think it is hard although 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 those who have their own source of income.

In fact, if you teach your kids how to budget, they will not have to struggle as adults and maybe even have enough to kickstart a savings fund they can maintain 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 family about your money will also help you accomplish a long-term financial plan.

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 telling them to record their spendings in a notebook.

Let them pick their own notebooks. Perhaps you can even decorate it together; just make sure they use it instead of throwing it aside.

• Set goals. Whether it’s mommy, daddy, or elder siblings, set financial goals and share them with all your family members.

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 towards these objectives.

• 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 three to five hours in your day to play it, you can simply play banker.

Set up a scenario where your children have jobs they enjoy. Pretend to pay them a salary in the form of an allowance or even just play money so they can create a budget by seeing their expenses.

It will allow you to bond with your children, discover what they like and also help them understand the importance of budgeting.

• Open a bank account. Once you have helped your children save a sum of cash, open a savings account with a bank and let them deposit their money there and even accrue interest.

These funds can later be spent on something they truly want. 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.

Emergency funds

An Emergency Fund is a sum of money 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 spending 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 the app.

Along with many budget apps on the App Store, The New Savvy Personal Finance App allows you keep track of your expenditure, and allocate money for the groceries, dining, bills and mortgage.

By doing so, you are able to see the money going in as well as control the money 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 you store my emergency funds at?

Your emergency fund should be stored in a savings account at the local bank. This is to ensure it will stay as liquid as possible. Next, you should try to earn the best returns on this stockpile of cash and find the bank with the best interest rates.

This article first appeared in thenewsavvy.com

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