Parents start worrying about their children’s future practically from the time they are born. Considering the fact that the average young adult graduates from college with a debt close to $40,000, it is logical that parents should worry about how to balance needs like saving for college funds with enjoying time together as a family. Building a healthy savings nest involves establishing a sound strategy from the very start. How can you reduce your family expenditure, enjoy regular family vacations, and give your children a start by helping with their college expenses in the future?
Setting a Budget
Financial advisors recommend that families save at least 20% of their income, while setting aside 50% for necessities, and 30% for additional items. Known as the ‘50/30/20 Rule of Thumb’, it enables you to build a nest for everything from retirement to emergencies. Setting a budget involves sitting together as a family and really crunching numbers. With respect to the 30% set aside from additional or discretionary items, which items/activities/experiences should win out? This is a matter for you to decide together, but you should come up with an exact amount to be saved, and an exact amount to be saved.
What do American Families Waste their Cash On?
The National Resources Defense Council reports that Americans waste $165 billion annually on food by throwing away items they simply do not wish to consume. CNBC, meanwhile, states that almost 70% of Americans say they waste money eating back, nearly 12% throw cash away on tobacco, and around 19.34% lose out on credit card interest. Around 9.25% even waste money by not returning items they don’t use – imagine the toll on your bank account and on your total carbon footprint!
Energy Costs are High
In CNBC’s list, electricity and heating or air conditioning were also high on the list of top money wasters. To what extent are you willing to change your habits (even a small way) to bring down your electricity bill? Some steps in the right direction are small. These include using a programmable thermostat, dressing more in accordance with the season, and even washing clothes in cold water. On a larger scale, switching your energy supplier can help you make significant savings. Quake Energy states that natural gas is almost always cheaper than electricity, for instance. Opting for natural gas is a matter of long-term thinking, of course. This is because gas appliances may cost more upfront, but in the long term, gas will impose a smaller cost on your utility bills.
Technology can be an Eye-Opener
Unless you keep every single bill and receipt, knowing exactly where your money is going can be difficult. This is where apps like PocketGuard, Goodbudget, and Mint can come in handy. Mint, usually voted as one of the top apps of its kind, works by automatically classifying transactions from purchases made by card, tracking them against your personal budget. The app actually sends you alerts when you have gone over-budget, which is very handy if you don’t track all expenses by hand. PocketGuard, meanwhile, helps you eliminate erroneous/double payments by tracking bills from phone companies, Internet providers, etc.
Parents know the extent to which the years seem to truly fly by once children are born. It is important to enjoy these years – and this means having a nice balance between leisure and vacation experiences, and a healthy savings system. By seeing exactly how much you need to save and how much you can ‘play with’, cutting down on unnecessary costs and making key changes at home, you can ensure your family’s future and have plenty of fun in the meantime.