For many households, the last three years have brought a significant strain on family finances. First, there was the first truly global pandemic since the Spanish flu, in the form of the Covid-19 virus. Almost overnight, firms needed to adapt to remote working methods to comply with new government legislation on the restriction of movement for citizens. Those that couldn’t (especially in the hospitality and physical retail industries) suffered greatly, and millions of employees were made redundant or put on zero hours contracts.
While the worst effects of the pandemic seem to have abated, current economic issues such as the rising cost of living and high levels of inflation are continuing to put a strain on personal finances.
In this challenging environment, every individual and household should take the time to create a comprehensive budget. By effectively managing income and outgoings, there’s the potential to deal with any unexpected financial circumstances that can cause stress and worry.
Plan to eradicate debt
According to recent statistics, approximately 80% of Americans have some form of consumer debt. As a nation, this debt equates to an average household figure of $38,000, which excludes mortgages. This high level of debt can cause intense amounts of stress and can start to have an adverse effect on quality of life.
A priority when setting up any budget is to ensure that debt is being paid off on the agreed terms from the supplier. There should be sufficient income to allow all monthly repayments to be honored while still being able to provide for the essentials in life such as food, clothing, and paying regular bills. In extreme circumstances, it may be wise to speak to a financial advisor about consolidating existing debts into a more manageable monthly repayment.
Aim to build an emergency funds pot
Whilst most months will have regular levels of outgoings into predictable costs such as mortgage payments and general living expenses, there will always be occasions where unexpected bills occur.
For example, your car may break down and need to be repaired quickly so you can continue to use it for work and family transportation. Household appliances eventually break and need to be replaced, which can also be costly when it’s unexpected.
It’s important to aim to save an emergency fund that can be used for such occurrences. This gives you the financial freedom to deal with unexpected additional costs and means that you’ll be less likely to take on debt to pay for essential repairs or new purchases.
Budget for pleasure
Finally, it’s important to recognize that a well-planned budget should also give you the freedom to still enjoy pleasurable activities. For example, many people enjoy the thrill of online casinos and seek to spend an exciting evening playing at the best payout casinos.
This form of online entertainment has experienced a massive growth in popularity in the last few years and allows people to try a range of games that rely on pure luck or a mix of luck and strategy.
The important thing to consider for such pleasurable activities is to only spend what you can comfortably afford to lose at these establishments. Set a strict budget before you log into a site and stick to this amount. This will ensure that you have genuine fun without compromising your overall budget for the month.