Last month, I read an article on the Huffington Post about the 10 home essentials everyone should have. I’ll keep my comments about the list to myself but suffice it to say, the list didn’t necessarily take all budget levels into consideration. Which I suppose is fine since you don’t need a big budget to make a home look inviting.
But this concept of the list got me thinking. After all, if someone can compose a list of all the things a home should have, shouldn’t there be a list of all things a household budget should have? I mean, you can’t afford those home “essentials” if you don’t have a handle on your finances.
Given that, I’ve devised my list of 8 Things All Household Finances Should Have:
- A budget. That’s a given. It doesn’t matter how much or how little money you have coming in. You need to know where it’s going and how you’re spending it. A budget is the first step in understanding your income, your expenses, your spending habits and balancing them.
- An emergency fund. It can be as little as $20 or as big as a year’s salary. Having something put aside in the event of an emergency is essential. And yes, even $20 can make a difference. That $20 can buy a number of things in a pinch. It won’t cover all of your emergency, but it’s a start.
- A contingency plan. Or, in my more informal language, an FU fund. If you’re ever in a circumstance that’s harmful, physically or emotionally, and whether that’s a relationship, a job or something else, having money set aside (and a plan for how to use it) will give you the freedom to leave.
- Entertainment/fun money. Being frugal and watching every single penny gets exhausting. Designate a few dollars every month—even $5 will do—to do something fun and relaxing. For $5, you can get a Redbox movie and some pizza. Or go to a happy hour for a drink and free food. Or a small, frivolous purchase. Something to help keep your sanity.
- List of free activities. Dovetailing from #4, having a go-to list of free activities is helpful, particularly if you have kids. While you can keep a kid entertained at home with toys, books, games, and the like, they do get stir crazy and need to get out. Finding a way to burn off that energy and leave the 4 walls of your home for free is very necessary.
- Cheap meals. There might be times when the grocery budget is a little short. Maybe you don’t have the space to stockpile so your pantry doesn’t allow for you to have a pantry/freezer week of meals. If that’s the case, having a menu plan of cheap meals will get you through until you have more money. Here’s a great list of 11 foods to buy when you’re broke as well as a cheap way to get four meals for $10.
- Debt repayment or savings strategy. Maybe both. If you are in debt, you must have a plan for how to get out of it. Debt is awful and your stress level will decrease tremendously once you know you have a plan to eliminate it. If you’re out of debt, you need to have a savings strategy to prepare yourself and your loved ones for the future. This, too, will give you peace of mind.
- Trust. If you are in a relationship where expenses are shared, you have to be able to trust your partner. That means having open and honest discussions about money, not lying or hiding purchases, coming clean about any outstanding debts, and having regular money meetings to make sure you are on the same page. You both need to understand your budget and agree on it. One person cannot dictate the way money is spent; it needs to be a mutual effort.
This list is by no means exhaustive. I’m sure there are a number of items that can be added. But it’s a great beginning. With these measures in place, any household can get a handle on their finances, both in the short term and long term.
What items, if any, would you add to this list?