Looking for some ways to save some money as a family? Read on for 8 easy steps to help your family out with your finances!
Dave Ramsey, prominent financial planning personality and proponent of the 7 Budgeting Baby Steps, recently celebrated his 62nd birthday. Though the money-saving tips that Ramsey proposes are largely universal, much has changed since his birth year of 1960. In particular, the costs of everyday items have skyrocketed since 1960 — and it’s harder than ever for families to make headway, pad their savings, and achieve financial freedom.
Sixty-two years ago, a new car could be driven off the lot for less than $2,600, according to AARP. By contrast, the cost of hitting the open road today can well exceed $30,000. Groceries, too, have ballooned in price; a pound of beef that cost less than $.50 in 1960 costs upwards of $5 today. While these numbers can be attributed to rising inflation, the US dollar’s overall spending power was also higher in 1960. Depositing $100 in your savings account today would have equated to a hefty $1000 deposit in 1960 — what many families today would consider to be a healthy emergency fund.
With prices on the rise across the country, and the dollar’s purchasing power on the decline, these family financial planning tips from Truehold can help families stretch their dollar and get ahead. Keep reading to see how you and your family can save money while still creating a memorable life.
Despite what some might say, effective saving goes far beyond avoiding skipping the avocado toast and trading Starbucks for a cup of joe from Café du Domicile (aka your countertop coffee pot.) For many families, luxury items like $12 toasts or $5 frappuccinos are out of reach altogether. But no matter your circumstances — whether you’re saving to create an emergency fund, subsidize a vacation, or afford a downpayment on a dream home — one of our first family financial planning tips is to establish a family budget.
Establishing a budget as a family can accomplish countless goals. On the one hand, it is a high-level view of your family’s finances that can illuminate potential areas of excess (and opportunities for savings). On the other, it’s a chance to teach children of any age the value of a dollar. Doing this at an early age can make conversations around money easier in the future while setting your children up for a future of greater financial literacy. In order to reap the benefits of a family budget, you’ll need to take an objective look at your income and everyday expenses. The more honest you are with yourself and your family, the better your odds of saving success will be.
There are numerous ways to establish a family budget, with one of the most popular being the 50/30/20 rule.
The principles of the 50/30/20 rule are simple: 50% of your household post-tax income goes to your needs, 30% to your wants, and the remaining 20% to your debts and savings. What’s not so simple about this rule is what you and your family may classify as “wants” or “needs.” Whereas needs for some families may include meals out and regular trips to the movies, others may see these as luxury items of the highest order — plunking them into the wants bucket. When building a budget according to this rule, do your best to look at your family expenses objectively; the more rigid your criteria for needs, the more your savings will start to pile up.
Part of what makes this budgeting tool so effective for many families is its emphasis on debt repayment. Debt repayment is an afterthought and unexpected expense for many, but actively working to reduce your debts will also reduce the amount you effectively throw away each month in interest payments. This, while steadily increasing your savings, will reduce your obligations and inch you and your family closer to financial independence.
Beyond establishing an effective family budget, here are a few more money-saving tips for families — ranging from frugal to fun.
Becoming a more efficient saver will take time, and as you begin to pay closer attention to your family’s habits, you’ll begin to discover new ways to save. If your trips to the grocery store result in certain snacks going stale, resist repurchasing or swap out a generic option. If you’re noticing water, lights, or electronics being left on, ensure that your household knows the importance of reducing energy consumption. If kids are insistent on new toys but quickly grow tired of them (which they are known to do,) consider secondhand options or introduce other engaging creative pursuits. Similar to getting an exploded view of your family’s budget, having a high-level understanding of your collective habits will help you become better savers.
While this money-saving tip might seem obvious, making conscious efforts to reduce your energy bill can lower your monthly “needs” spending and free up room elsewhere in your budget. From simple changes like reminding children to turn off lights when they leave a room to reminding family members that a blanket or sweater can sometimes be a suitable replacement for bumping the thermostat up, changing small habits around utility usage can make a huge difference.
On average, families in the US spend $2,060 per year on utilities, according to Nationwide. Even a 20% reduction in this annual expense can free up several hundred dollars for gifts, small trips, and savings deposits. For those looking to take their energy savings to the next level, putting your conservation savings toward a smart thermostat or green appliances can improve your savings over time. Though these often have a higher up-front cost, the future savings will more than pay for the initial investment.
Your children are only young once, and there is immense pressure on parents to create memorable experiences for their children. This pressure is only heightened by budgetary limitations, but free fun can be found — you just have to look for it. Membership at many public libraries is free, and family trips to the library can provide hours of fun for kids (and relaxation for parents) in addition to book and movie rentals and even free library-hosted events. Zoos and museums often offer free admission on select days of the month, and keeping track of these days can quickly fill a monthly (free) fun calendar.
For families with older children, look for opportunities to get outdoors. Local hiking trails, campsites, and even scenic drives can be great opportunities for families to get together and make memories, strengthen bonds, and have fun without breaking the bank.
When Netflix and Hulu first launched, spending $20 per month on streaming services over a $150 cable bill just made sense. Now, with too many streaming services to count — and exclusive content “justifying” each one — many families are paying for more services than can be counted on one hand. While this alone is not a major expense, as the average monthly cost of streaming services is still below that of cable, the question becomes whether families are getting their money’s worth.
For example: Some families may subscribe to a streaming service for a single series, like the Netflix sensation Stranger Things, forgetting about the service altogether after the show is over. In the case of Netflix’s new $15.49/month price tag, a year of unused premium subscribership is over $180 wasted. For that reason, one of the best money-saving tips for families is to narrow down what you actively use as a family and trim the excess. In other words, if you’re not using it: lose it. You can always resubscribe when your favorite show returns!
You don’t have to audition for Extreme Couponing to be a smart shopper. For families with young children, hunting for value can mean shopping for thrifted clothing and toys that kids will inevitably grow out of instead of purchasing them brand new. In fact, families of any age or size can benefit from the savings of shopping secondhand — be it for furniture, books, games, or even cars.
For new goods, families looking to create room in their budget should think about the importance of brand names. Oftentimes, branded products and generic ones are virtually identical; the added price for brand reputation often goes to fund advertising campaigns and flashy packaging. By looking for value over recognition, families can save big on everything from toothpaste to toys and put money toward the things that truly matter.
When it comes to money-saving tips for families, it’s proper planning that has the potential for the greatest impact in nearly every area of life. If the family vehicle is in need of an oil change, planning for this expense can prevent damage to the vehicle from delaying necessary maintenance. Preparing for the purchase of new tires, a much larger expense, can be the difference between comfortably covering the cost or being forced to open a high-interest credit card to get your vehicle safely back on the road.
The importance of planning goes beyond necessities. If the family has embarked on an all-day free trip to the zoo — or a celebratory trip to a theme park — packing snacks, water, and meals ahead of time can keep fun days from being cut short and prevent triple-digit food expenses.
For many families, trips to the grocery store can be a major source of anxiety. Pleasing the entire family, planning out meals for an entire week, and staying within budget can prove to be too much to handle — but being a critical shopper can make the job just a bit easier while also helping you save. Everyone is likely familiar with the advice not to shop on an empty stomach, but there are other ways that families can save money while stocking up at the grocery store.
Similar to our earlier tip about opting for generic brands, families can save money at the grocery store by ditching big brands whenever possible. Even though the packaging might be prettier on the name-brand cereal, the internal contents are likely similar enough to fool your entire household. (Though there may be no true substitute for Oreos.)
Beyond avoiding paying for brand names, being a critical shopper means analyzing your family’s own wants and needs and cross-referencing them with in-store promotions. If a specific snack was requested, but a similar treat is on special for half the price, swap in the substitution — or, better yet, review the items on special before taking requests to limit any potential disappointment.
No two families are the same, and creating memorable experiences while padding your savings account will look different depending on your family dynamics. With that said, a little bit of creative thinking can go a long way no matter the family, and our final money-saving tip for families is to think outside of the box.
Here are just a few creative ideas for families to have fun while saving money:
No matter your financial situation, the above money-saving tips for families will help you stretch your dollar and improve your family’s future. While some families may adjust quickly to a more frugal lifestyle, others may not — and it’s important to understand that these savings will not always come overnight. However, by simply working to improve your habits and instill the value of a dollar in your family, you’re already making strides toward financial freedom.
For an additional financial planning checklist, more money-saving tips for families, tools for achieving financial independence,information on our Sale-Leaseback, or if you’re wondering how much is needed to retire, pay us a visit.
Sources:
1. AARP. The 1960s Versus Today https://blog.aarpmedicaresupplement.com/the-1960s-versus-today-take-a-walk-down-memory-lane-with-a-look-at-what-things-cost-then-versus-now/#:~:text=Cars%3A%20In%201960%2C%20the%20average,went%20from%20an%20average%20of%20%24
2. CPI Inflation Calculator. Value of $100 from 1960 to 2022 https://www.officialdata.org/us/inflation/1960?amount=100
3. Investopedia. The 50/30/20 Budget Rule Explained With Examples https://www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp
4. Nationwide. What is the Average Household Utility Bill? https://www.nationwide.com/lc/resources/personal-finance/articles/average-cost-of-utilities
5. Ramsey Solutions. Dave Ramsey’s 7 Baby Steps https://www.ramseysolutions.com/dave-ramsey-7-baby-steps
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