Budgets for 35-50

Managing a household budget during this stage of your life is all about keeping control.  By now you should have a handle on the basics of budgeting (if you don’t, please go back and review the basics of budgets are presented in an earlier blog http://site2491.cfn.acsitefactory.com/content/now-about-budget) . The biggest challenges you’re going to face during these years are the larger, unexpected items.  A car accident, a major health problem, loss of employment, and the increase in the costs associated with your children (driving, competitive sports/dance/forensics, etc.) as well as the risk of being too free with your credit cards.

During these years then, you should work diligently on several key things:

  1. Increase your emergency fund.Use every bonus, tax refund, inheritance, or any other money above and beyond your normal earnings to pad your emergency fund.

  2. Increase your retirement savings.If you haven’t started, by all means get to it.If you have started, try to gradually increase the percentage you save.A 1% increase each year for 5 years can make a huge difference down the road.

  3. Make sure you have insurance for the most likely risks – health insurance, car insurance, and life insurance.You may not like paying the premiums, but you’ll like the alternatives even less!

  4. Take your time making decisions for larger purchases, especially if you’re planning to use a credit card to buy them.Credit cards are fine if you pay off the balances every month, but the interest rate on most cards are high, which makes the item you purchased cost even more if you don’t pay off the balance right away.

Something else you need to do during these years is to review each of your “normal” budget items and see if there is a way to reduce the cost.  For example:

  1. Shop your car insurance every few years.Get quotes from two or three other companies to see if your current policy is still priced effectively.

  2. Review your cell phone, TV, internet, and landline (if you still have one).Many times you bought “the bundle” in an effort to save, but you may be paying for things that you don’t really need.

  3. Use the “one in, one out” technique.For every non-disposable item you buy during these years (clothes, television, computer, tools, furniture, or pretty much all non-food items) consider getting rid of the old one.You will find if you do this, you will keep your clutter down and your household more efficient including the budget. (Will anyone else admit that they bought something they wanted only to find out they already had one they forgot about or couldn’t find?)

This is also a great time to get the family involved.  If you have children, consider giving them an allowance and help teach them good money habits.  Don’t think you’re a teacher?  How about just sharing with them all the things you wish your parents would have taught you!

Finally, even if you consider yourself well in control of your budget, every six months or so do the “zero sum” exercise.  Account for every penny that comes through your hands in a month.  You may still be surprised about expenses that have crept in while you weren’t looking!

Thanks for your time and attention.  As always, if there is a topic you would like me to include in these posts, feel free to email me at gedwards@cfnmail.com