Auburn Savings Bank MACARONI KID COLUMN – NOV 2021
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Question: What is the best way to handle family finances? Share, split, or one person does it all?
Answer: When handling family finances, we suggest it be a shared responsibility among adults. That way, all adults are aware of the financial situation, can make payments when necessary, and not be surprised by any bills. A good place to start is by making a budget together! Your budget should take into consideration household income, expenses, and the family’s short- and long-term financial goals.
How to Start a Family Budget: Begin by making a list of every source of income your family earns. If it’s helpful, create a spreadsheet that breaks down how much money you collectively earn in a week, a month and over the course of the year. Now, identify necessary expenses such as mortgage or rent, utilities, vehicle payments and insurance, groceries, and transportation money such as gas or bus fare. Think of every bill you pay each week, month, or year and include them in your budget. Feel free to create a list, a spreadsheet, or download a helpful budgeting app to keep your income and expenses organized and easy to update.
Pro tip: If you have a payment that is due annually, take the payment amount and divide by 12. Set aside that amount each month rather than pay a larger sum at once!
How to Save on a Budget and Why: The next step to creating your budget is to make sure you’re also saving money. To grow your savings, a good place to start is to commit by setting 10% of your income into a savings account. If that amount doesn’t work for you or your family, find the amount that will. Anything is better than nothing when it comes to saving.
What is “Fun” Money?: Okay, now you should have a clear picture of the amounts you’re earning (income), spending (expenses) and what you’re setting aside (savings) throughout the year. Here’s the most fun part: subtract the amount of savings and expenses from your total income. The remainder is what some people call "fun" money! Determining as a family what to do with your "fun" money gets everyone working toward common goals. Budgeting is a formula for success that you will celebrate while on that dream vacation or enjoying the family camp that you purchased with those savings you’ve been able to squirrel away.
Pro tip: Budgeting isn’t about “not buying anything,” but rather spending within your means. Budgeting is also a great learning experience for children in the family. Learning how to create and follow a budget is an important tool they will utilize into adulthood. When family members stay within budget, it helps everyone understand the balance between meeting financial responsibilities and how to work toward specific goals. The reward from saving is the cherry on top.
Part of the fabric of Lewiston-Auburn since 1887, Auburn Savings provides financial products and services for individuals, families, businesses and the shared community we call home. Visit us at auburnsavings.com
