Budgeting Strategies for Young Families

Is it just me, or is everything more expensive these days? 

I feel like I am older than my years when I say it… but the truth is, we are in some crazy times. According to the U.S. Inflation Calculator, which tracks the changes in the value of a dollar, year-to-year, our average inflation in 2022 is a whopping 8.3 percent!

That figure is way up, considering just 10 years ago it was a 1.7 percent increase.

*The latest inflation data (12-month based) is always displayed in the chart’s final column.

With the value of the dollar down and the cost of everything else up, it is a tough time to budget our dollars and cents on the household level. 

How To Budget for Your Household

If you are just starting out, or perhaps need a better grasp of your personal finances, it is best to start with a run-down of your monthly bills. Grab a notebook (or jump onto a spreadsheet if you’re more technically inclined) and dig up your past few months’ bills. Everything you regularly owe money for should be calculated on the document. From your utility bills, to the average grocery costs, you want to add up any and all repeating debts.

From there, you can get a good look at what it costs, on average, to operate your household. This can help you plan, budget, and save more efficiently, since you have a better idea of the figures.

Once you have established stable figures such as utilities and mortgage, you will also want to leave room for those that are less predictable, such as spending on entertainment, going out, or special occasions, such as vacation.

Budgeting Struggles for Young Families

Young families may find it especially difficult to budget and save. These are the days of saving up for your first home, or perhaps a larger home as your family grows. You may be ready to start a college savings plan, or maybe you’re still consolidating and paying off your own student debts.

No matter what stage of life you find yourself in, you want to plan wisely for the future. Saving can seem like an unattainable goal, but you never know what the future truly holds. Be sure to save your acorns for winter, so to speak, and set aside what you can for emergencies, too.

Retirement Is Always Important

Even when money is tight, you want to remember to store some funds away for retirement. Smart planning, along with wise investments, can help ensure you have a comfortable retired life. Even in the days of tight budgets, remember that you’ll likely need investments to rely on in your golden years.

Based on figures from Fidelity’s Retirement Analysis report, the average 401(k) balance is $121,700 as of the first quarter of 2022. However, those figures largely fluctuate depending on your age.

Depending on the amount of time you’ve had to save, the average American needs to save a significant amount while still in their 20s. Most recommendations say that you should save 10 to 15 percent of your salary each year for retirement.

The Consumer Financial Protection Bureau offers a calculator for those unsure of how much to save for their age. Additionally, the bureau notes that planning with a financial advisor can be the best choice to discuss your unique, personal needs, as no two retirement plans are the same.

Tips for a Smart Budget

Wherever you find yourself after a quick analysis, you can decide what steps are necessary. Perhaps you need to focus on a savings plan. Maybe your contributions for your kids’ college funds are a bit low (or, admit it, haven’t started).

It seems, no matter how hard we try, we can’t stretch a dollar enough. Try some of these tips to help make sure that money covers all of your family’s necessities. 

1. Decide on a budget, discuss it, and stick to it!

So many families, or even couples just starting out, have not had serious discussions about money. It tends to be one of the top three most argument-causing topics in a marriage, according to Minneapolis-based ICP Counseling.

Don’t be afraid to talk about the tough stuff. If the entire family is on the same page, your budget will likely flow more smoothly as you work together. Even children can benefit from the conversation, as it is great for them to see how far a dollar goes (and how little may be left at the end of the day for that much-desired toy or candy).

2. Cut costs where you can.

Let’s face it, some bills are as predictable as death and taxes. It isn’t likely you will change your usual costs, such as a mortgage (unless rates improve and you refinance), utilities, and household bills. However, you do have room to save despite fluctuating and recurring costs, such as groceries, entertainment, or outings.

Consider clipping coupons, shopping for generic over name-brand, or cutting back on the amount of take-out you order each week. Skipping that daily coffee run could save you big time (a $5 cup each weekday means $25 a week, or $100 a month). Instead of heading to the theater, microwave some popcorn and stream a family flick in the comfort of your own living room.

3. Check out tax breaks via state-run programs.

If saving for college is on your mind, consider the Minnesota-based 529 plan. The Minnesota College Savings Plan is a state-sponsored, tax-advantaged 529 college savings plan that allows you to plan ahead for a college education (and its hefty price tag). Any citizen of the state can contribute (think aunts and uncles or grandma and grandpa), and get tax breaks, making sure more of your dollars are going to College Joe and not Uncle Sam.

See if your workplace offers flexible spending accounts. From the cost of childcare to the purchasing of healthcare products and services, some flexible spending accounts allow you to set aside funds, tax-free, in order to purchase these life requirements.

4. Find the best prices on EVERYTHING.

From the price at the pump, to the next family vacation, be sure to shop around for the best deals. While this may sound obvious in your routine shopping, consider also doing a check on things like your insurance costs. Thankfully, we offer checks on those, as my husband, Reegan, and I partner our businesses in the same place.

While you are here to get an assessment on your finances, you can also have Reegan look into better rates on your life, health, home, car, or other necessary insurance policies. We often tend to select a policy and leave it on auto-pilot, not bothering to see if you qualify for better bundles, rates based on age, or just shopping around from company to company.

5. Seek the assistance of a professional.

You don’t have to have millions to seek the advice of a financial planner. Sometimes, I can be most helpful to my local families just trying to stretch a dollar. The fewer you have, the more crucial it is to sensibly plan. Make an appointment today, and we can sit together to review your options for savings, future plans, or even an emergency fund.

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Lincoln Investment. The material presented is provided for informational purposes only. All investments are subject to risk, including the risk of principal loss. Reegan Rehm, and Rehm Insurance and Financial Services are independent of, and not affiliated with, The Lincoln Investment Companies. Insurance products are not offered through The Lincoln Investment Companies. Participation in a 529 Education Savings Plan (529 Plan) does not guarantee that contributions and investment return on contributions, if any, will be adequate to cover future tuition and other education expenses or that a beneficiary will be admitted to or permitted to continue to attend an educational institution. Contributors to the program assume all investment risk, including potential loss of principal and liability for penalties such as those levied for non-educational withdrawals. Check with your state’s guidelines prior to withdrawing the funds. An investor should consider, before investing, whether the investor's or designated beneficiary’s home state offers any favorable state tax treatment or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state's qualified tuition program. Consult with your financial, tax or other adviser to learn more about how state-based benefits (including any limitations) would apply to your specific circumstances. For more complete information, including a description of fees, expenses and risks, see the offering statement or program description. When you link to any of these websites provided here, you are leaving this site. We make no representation as to the completeness or accuracy of information provided at these sites. Nor are we liable for any direct or indirect technical or system issues or consequences arising out of your access to or use of these third-party sites. When you access one of these sites, you are assume total responsibility for your use of the sites you are visiting.