Create a budget for right now
With your income fluctuating, you'll need a budget that reflects that and helps you clearly see how your expenses match up. If there's a shortfall, a budget will help you pinpoint areas to trim.
The 50/30/20 budgeting rule is a simple method that uses just three big categories. It works like this:
- Aim to spend no more than 50% of your monthly income on fixed expenses such as rent, food and insurance.
- Spend up to 30% of your income on discretionary expenses like dining out, entertainment and vacations.
- Allocate 20% of your income toward long-term financial goals like retirement and college savings and paying down debt.
In the months after Becca's passing, Trevor struggled to balance it all. He worried so much about ensuring his children's financial futures that he would often cut back on discretionary spending today.
“My wife used to call me cheap," he says. “[I worry that if] I squander it, it will be gone before I realize it."
Working with a financial advisor gave Trevor a fresh perspective.
“Right now, it's very important to enjoy your kids and do some fun stuff," the advisor counsels. “Reward yourself responsibly."
If you're ready to start working on your budget, use this tool .
Keep an eye to the future
Whatever challenges they encountered, Trevor and Becca never wavered in their commitment to provide a college education for their children. With Becca's passing, it's now up to Trevor to make that goal a reality.
“My biggest financial concern is making sure that I'm able to save up enough for them so that they're financially able to attend good schools and be able to learn and grow and become the good young men that they will be one day," Trevor says.
If your children are young, take advantage of the benefits of compound interest . You may not be able to save the full amount of college tuition, including room and board, but even small deposits in a college savings plan such as a 529 account, can help.
Involving your kids in the process of saving for college gives them a stake in that goal and teaches financial literacy.
Additionally, spend time thinking about your retirement. A reduced family income may mean less money to allocate to retirement savings — at least for a while. If money is tight, you may need to make difficult choices between your own retirement and your children's college savings.