Five habits of DEBT FREE families!
Being a debt-free family doesn’t have to be hard but there are challenges that families face that couples and singles just don’t have.
School shoes for one. Half term entertainment for another. Throw a fussy eater into the mix and your batch cooking plans can go right out of the window! But there are steps you can take to make things.
Many debt free families share the same habits, and I’ve got some of the most popular here, to help you, too!
They pay with CASH!
Debt free families use cash for their everyday spends and there’s a good reason for this. Cash is so much harder to part with than a card!
The physical act of handing over real money makes you think twice about where it’s going.
If your kids are old enough to understand, include them in the budgeting. Teach them how a cash budget works.
Our own kids loved getting involved, and their enthusiasm is infectious.
Using cash mean it’s so much easier to budget for small everyday purchases. In our house we get £25 a week for ‘living’ costs. When it’s gone, it’s gone. You know where you are.
And you very quickly decide you don’t really need that second coffee!
They budget according to their goals
This seems like a no brainer until you realize how few people actually do it. Do you know where you want to be financially in 2 years time? 5 years time?
We decided to give ourselves 5 years to become debt free. It’s a big challenge.
If you’ve got a goal you’ll know what you need to save first (before you spend a single penny of your salary) to be able to meet it.
Then you use what’s left in your budget and make it last the month.
If you spend first and then use what’s left towards your goals, you make reaching them much harder.
Not to mention it’ll take ten times longer to get there!
They STICK to their budgets!
Debt free families have serious focus. Being debt free takes dedication when you’re up against a world that wants you to spend spend spend!
It’s not always easy to stick to a budget.
Be realistic about the things you enjoy spending money on. If you enjoy going out for coffee, go out for coffee. Just go out for a coffee once a week instead of 4 times.
It might not be realistic to give up on nights out, so be honest and budget accordingly. Maybe instead of going out every weekend, you settle on two weekends a month and budget accordingly.
An unrealistic budget is one you’ll find hard to stick to!
They have an emergency fund
Debt free families don’t get caught out by the small emergencies that surprise us all!
They don’t all have huge money pots stashed away, but they are able to pay for a new tyre or leaking pipe without having to resort to borrowing money.
Having an emergency fund when you’re just starting out in budgeting can also help you if you’ve forgotten to add anything into your budget.
It takes time to adapt to living on a budget and it might take a little while to settle into it.
While we cleared our debt, we had £1000 put away in an easy access account. It was less than we’d have liked, but we added to it when we were debt free.
There’s going to be bumps along the road to being debt free, and an emergency fund will stop you adding to the debt.
They automate their money
Automate your money so that as soon as it hits your account, it’s redirected to whatever it’s earmarked for.
You could set up a standing order to another account for savings or paying off debts, so you don’t even see the money. Having money sitting in your account is a temptation, so pay bills straight away and take the temptation away.
Pay all your bills by direct debit and you’ll never have to pay a ‘late’ charge again. Have everything go out the day after payday.
It might take an hour on the phone to set up direct debits or change them all to a specific day, but you’ll thank yourself later on.
What’s left in your account is the cash that’s used in your budget.
Take it out and split it up for each week.
Then do it all again next month!
Get your free 1% at a time printableThis simple trick helped us to clear £15,000 worth of credit card debt. Simply take your savings goal and divide it by 100 to get your 1% at a time. Once you have saved or earned 1%, cross it off. Download this free printable to keep you on track.
This is a guest post from Steph at DebtFreeFamily.