Living within your means in an "easy" credit environment takes serious application to the family finances. Austerity has had an effect on families in the United Kingdom and frugal family life requires living on a tight family budget. Since the global financial crisis of 2008, austerity has bitten and family budgets have become a topical debate.
Easy credit facilities are a blessing for those with secure and regular income from employment. However, for those living on shoestring budgets, credit facilities can be the undoing of a family's finances. When people live to their maximum credit limits, a family's lifestyle can change dramatically. But all is not lost. There are ways out of debt that can be done with some strict budgeting techniques.
Living on a tight family budget can be emotionally draining and its important to not underestimate this. It may be hard to resist temptation to take on further credit in order to resolve the problem. This is known as consolidation. Consolidation can only work if there is the security of a regular income. Where income changes could occur, it is vital to begin to change lifestyle habits of relying on credit.
The largest outlay for many families is the mortgage or rent on the family home. This is the most important element of a family budget. This is the first and foremost payment which should be made first.
Next comes the council tax on a home. This is a mandatory charge that must be paid. The consequences of not paying this charge is strident enforcement measures. If, difficulties in instalments are foreseen, it is important to contact the local authority and inform them of financial difficulties. Most local authorities will work with a family to avoid fees placing more pressure on the family budget.
It is important to ensure all utility bills are maintained. Most utility companies will set an affordable monthly rate depending on usage. The best way to cut costs is to monitor usage and cut down on consumption where possible in the home. Check usage regularly by taking meter readings and entering these on an online account. This will generate a bill that will be collected over a 12-month period in instalments from a designated bank account.
Look at other areas of a families spending habits for food, telephone costs and other incidentals. Put together a budget diary either in a notebook or on a spread sheet. Log down every purchase and look for ways in which costs can be cut. By performing some financial housekeeping, cutting down costs is much more viable when it is written down.
One of the best ways to manage a family budget is to do some old-fashioned jam-jar accounting. This involves imaginary jars where each outgoing has its own jar. In this, place the amount of money required each month for that expenditure. If all expenditure is taken via direct debit then set up a savings account and call it "household account" Most banks offer online facilities in which a separate account can be named. Watching pots of money grow is one way of ensuring all monthly financial commitments are met. Where unsecured debt is part of monthly commitments, if interest rates are crippling the family budget, its important to speak with creditors and reduce these to a minimum. Most creditors will work with people who are struggling.
It is important not to bury one's head in the sand. By talking to the whole family, gaining their support for ways to improve the family budget, this will show responsibility and educate children how to manage money responsibly.