 Keeping Check On Family Income And Expenses
Living on a reduced income is traumatic. Is there anything you can do to ease the burden? Yes!
Reduced income may be a result of company layoffs, a particularly bad year in your farm or business operation, divorce, separation, illness or death in the family. Regardless of the cause, you have to take control so you can survive. If you have experienced a decrease in income, it's important to take charge of your money.
One of the hardest things to cope with is that you can't spend as much now. Pretending nothing has changed will not ease your financial burden. You have to find ways to reduce your expenses and increase your income.
You need to know where you are financially so you can adjust your spending. Here are some important steps that can help you cope with your reduced income.
Step 1. Know how much money you have coming in.
- Write down the amount of money you had coming in monthly before you experienced a loss of income..
- Write down the amount of monthly income you now have to spend. It's important to know how much income you will have to work with so you can plan where it needs to go. Include income from all family members -- paychecks, unemployment, compensation, child support, alimony, government assistance and so forth.
Step 2. Know where your money goes.
- Use past spending records to estimate your expenses before your income was reduced. Use checkbook stubs or expense receipts. If you re having trouble estimating your expenses, you may need to track your spending for a few weeks. Write down what you spend every day for a month to get an accurate picture of your expenses.
- Decide where you can cut back. It's difficult to reduce your rent or house payment or car payment. But you may be able to cut back on utilities, food, gasoline, clothing, day care, recreation, contributions, gifts, liquor and tobacco.
If your reduced income is equal or greater than expenses, you are in good shape. If your expenses are greater than your income, look for some ways to gain control.
Concentrate on what you can do. How can you make it while your income is reduced? If the drop in your income is going to last more than a month or so, here are some tips for coping.
- Keep lines of communication open among family members. Discuss priority needs for your family. This is especially important if needs differ among family members.
- Reduce personal and household expenses?
- Set priorities for paying bills.
- Control spending by setting limits for each budget item.
- Prepare and follow a written budget.
- Avoid using credit except for emergencies.
- Contact your creditors. Explain your financial situation to them. Show them your budget and a list of the debts you owe. Ask if they will work with you until you can adjust.
- Use community resources to supplement your income while you are reorganizing.
- Look for ways to increase income.
As you complete your income and expense lists, here are some expenses to keep in mind.
Housing
- rent or mortgage
- taxes
- insurance
- cleaning
- maintenance and repairs
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Utilities
- water
- electricity
- gas
- telephone
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Transportation
- car payment
- gas and oil
- maintenance and repairs
- auto registration
- insurance
- bus
- taxi
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Food
- food at home
- food away from home
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Medical and Health
- insurance (health disability)
- medicine
- doctors and dentists
- hospital
- eyeglasses
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Clothing and Personal Care
- clothes
- dry cleaning
- laundry
- cosmetics
- toiletries
- shoes and shoe repair
- barber, beauty shop
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Entertainment
- cable television
- books, newspapers
- membership dues
- movies
- video rentals
- sports
- hobby supplies
- vacation, travel
- pet expenses
- stationary, postage
- tobacco
- liquor
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Education
- school supplies
- tuition
- fees
Miscellaneous
- child support
- contributions and gifts
- credit payments
- savings
- other
- Life Insurance
- Day Care
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This information is distributed by University of Delaware, Delaware Cooperative Extension
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