According to the Economic Policy Institute’s family budget calculator, “Even in the best of economic times, many parents in low-wage jobs will not earn enough through work to meet basic family needs. Annual wages for one full-time, full-year minimum-wage worker total $15,080, far below what is necessary for a one-parent, one-child family to live in even the least expensive family budget area.”
In this current economic climate, any cost savings ideas are welcome for the family on a budget in order to secure the adequate, modest living standard mentioned by the EPI. There are so many things that the family on a budget needs to spend money on: food, rent, credit card bills, medicine, clothing, education, technology, gym memberships, gas and more. Yet, when you look at all these expenses, the task of setting money aside with family budgets seems monolithic, even borderline impossible. Thankfully, there are tons of easy money saving tips that can help create a family budget plan.
The first step for the family on a budget is to learn LeanVest calls the “50/20/30” rule. This is a simple way to create an accurate budget for any person or family size. There are three categories: essential expenses, financial priorities and lifestyle choices. The family on a budget shouldn’t spend more than 50% on the essential expenses, which includes housing, transportation, utilities and groceries. After the essentials are taken care of, no more than 20% of the budget should go towards financial priorities. This category is imperative to set up stable economic foundations for the future, and includes any putting money aside and paying debt. Lastly, 30% of the budget should go towards lifestyle choices, which is basically the miscellaneous category. Such items that fall under it are phone bills, Internet bills, shopping, bar tabs, and the like. The family on a budget shouldn’t feel bad about spending this money, so long as the essentials and the financial priorities have been dealt with.
Saving money is a struggle for everyone, and not just the family on a budget. However, with the sagacious budgeting of the 50/20/30 rule, the family on a budget can turn their economic situation around. If you have any questions, feel free to ask in the comments!