How to budget with 2.4 children
The words “family” and “budgeting” might seem like a contraction in terms, but just because you’ve got a sprog or two in tow, it doesn’t mean there aren’t still plenty of MoneySaving opportunities out there to ensure you’re not confined to a life of baked bean dinners.
With the cost of raising a child to the age of 21 estimated at over £200,000, every penny you can save along the way counts.
So first things first, you need to understand what a budget actually does. It essentially looks at two things; whether you spend more than you earn, and what you can afford to spend. The only way you can find this out unfortunately, is by doing an extensive budget plan.
This isn’t for the faint hearted. To do it accurately you should set aside at least an hour. So wait until the kids are transfixed on Peppa Pig, or in the land of nod and set to work (though if you’re reading this and don’t have kids, the same principles still apply).
If your paperwork filing resembles more of a landfill than a filing cabinet, then this process may be a bit trickier for you. But ideally you’ll need to gather together your bank and credit card statements from the last three months. On there you’ll find all your standing orders and direct debits to give you a good idea of what you spend (this might be a good time to boil the kettle and have a brew).
Once you’ve done that (and got your caffeine fix), it’s also a good idea to gather together your payslips to establish exactly what you earn plus any bills or other documents if possible (though your statements should also detail this info).
If the results show that you earn more than you spend (good for you), you know you’re in a stable position to address your finances head on and see where you can save money. If you spend more than you earn, then you could risk getting into what’s called a ‘debt spiral’, the end result of which means that all your money goes towards repaying off debt.
If you’ve got an overspend, don’t panic, it’s not too late. There’s a number of things you can do. Even if you’re one of the smug people that earns more than you spend, as I’ve already said, with a child costing as much as they do, you may as well jump on board with these money makeover tips.
Find the energy to think about your energy and save £200
With kids’ baths, games consoles, TVs and lights left on, extra heating and more, even small families can face huge fuel bills, leaving many worrying about how to save money. But you can easily make big savings simply by changing gas and electricity providers, and get cashback or a case of wine on top. The easiest way to find out which is cheapest for you is to use a comparison site. Our calculations show that switching from an average standard tariff to the cheapest tariff on the market can save you £200, so it’s well worth doing.
Take the downshift challenge and save £1,000s
With TV ads encouraging kids to demand pricey brands, the cost of a family food shop quickly adds up. But many can easily save over £1,000 a year by doing the ‘downshift challenge’. Think about it, drop a brand level on everything you buy and you’ll usually cut the bill by 30%. For a family’s £100 shop that’s £1,750 a year.
Supermarkets have hypnotised us into moving up the brand chain. Many gradually buy increasingly more expensive versions of the same thing. So here’s the challenge: swap one of everything to something just one brand level lower. Then see if you can tell the difference – if not, stick with the cheaper one.
Don’t forget about tax credits, they can be worth £1,000s
Having kids soon adds up, from new shoes to school trips and more. Tax credits can massively help offset this as they can be worth £1,000s a year.
Tax credits are pay-outs from the state made regularly into your bank account to support you if you’ve got kids, or if you work but have a low income. How much you’ll get depends on your circumstances and the more kids you have, the more you could get.
There are two types; child tax credits and working tax credits, and you can be eligible for none, one or both.
Do a benefits check up
A treasure trove of extra cash is available to help families with kids in tow, yet many wrongly assume they aren’t eligible. To quickly check, use the benefits check-up atwww.mse.me/benefits. Just enter your details to see how much you may be entitled to.
This’ll help check your eligibility for all the main benefits, including council tax and housing benefit, income support and many, many more.
And finally, if you have more or the same number of bedrooms in your house as people, you’re probably better off with a water meter.
This is just the tip of the family budgeting iceberg, for full information on how to stick to a budget and save money when you’ve got a family, see www.mse.me/budget,www.mse.me/moneymakeover, and www.mse.me/familysave.