How to Set Up a Family Budget
Having a family budget set up is essential in this day and age. A family budget will help you keep your spending patterns in check, as well as help you put money aside in savings. Achieving your financial goals starts with a set budget that you strictly adhere to.
Figure Out Where Your Money Goes
Start by keeping track of everything that you spend money on. Find receipts that you may have lying around, think back on what you spend money on when you stop at the local convenience store and figure out what you spend money on the most. Impulse buying is one of the biggest disasters to a family budget.
Next, make a list of all of your fixed expenses. These include your mortgage or rent payment, vehicle payment, clothing, gasoline, insurance for your car and home, utility bills, phone bill, child care costs, groceries and anything else that you must pay every month. Also include expenses that may not be every month, yet still take a chunk out of your budget. This includes doctor or vet bills, travel expenses, car repairs such as oil changes, and more.
Finally, list your entertainment expenses. This includes movies, restaurants, fast food and anything else that is purely for fun.
Cut Corners
Talk
as a family about where and how you can cut corners. Most people agree that
cutting out a lot of entertainment expenses will help the budget.
But look towards other ways to shave more off of your spending habits.
Daily trips to get store bought coffee can add up- instead, make it at home.
Cut out extras on your phone plan. Devise a grocery shopping list that cuts
down on the amount in food you spend per month. Work on the impulse spending
that most people are guilty of, and see how you can improve on it.
Set up your household budget income level. Include all income coming
in from salaries, commissions, any bonuses that you may get, as well as any
other income coming in on a regular basis. Include income from everyone who
is contributing to the household. Set up your goal for your budget. Talk to
your family about your short term and long term goals you have for sticking
to the budget and saving money. Once everyone is on the same page about your
budget, goals, and why it is important to stick to everything, you will
start to see a change.
Next, set aside the amount of money that you MUST pay out each month, as in mortgage and car payments. Draw up a payment schedule for all of your bills, with the necessary ones being paid first. This will be your Expense Budget, and one that should not vary too much from month to month. Make sure that these bills get paid first, and on time. Late charges and overdraft fees can add up quickly, and take unnecessary money out of your budget.
After you have established how much money you have to pay out each month for your necessary expenses, deduct that total from your combined monthly net pay. This will be the amount that you will use for the next steps of the family budget, as follows.
Set up a budget for expenses that change every month. This is your Variable Budget. This may include car maintenance, repairs to the house, vet bills and more. This is not so much money for emergencies, but for those expenses that you usually just can't help from occurring.
Set up a family emergency fund. This may be put into your savings account, or just money set aside for use only when an emergency happens. This fund will pay for those unexpected emergencies, such as a doctor bill or expensive prescription, should the need arise. If no money is needed to be taken from this for the month, the money can be put into savings or a savings bond.
Next is your family allowance budget. This part of the budget is for entertainment purposes. This should be based on what you have left over after your expenses, variable and emergency budget. This cash can be used for everyday wants, vacations, impulse purchases, activities and more. It is very important that this part of the budget is adhered to so that the rest of the budget runs smoothly. Impulse spending can quickly eat up the money set aside in the family allowance budget, so all family members must understand the importance of this part.
Re-Balance and Revise Your Family Budget as Needed
Even after drawing up a budget, it is important to balance it and re-balance it every month or so. Check to see that you are staying within the set budget, and if you are meeting your goals. Look for ways to trim off excess money off your your expenses, if possible.
Make as many adjustments as possible so that you can stay within your family budget. Watch all of your families credit card spending. Try to use your credit cards for emergencies or business purposes only, when it is beneficial to do so.
Shop at sales to trim money of the clothing and food expenses. Look for free, local activities for entertainment, stay in an rent a movie, or spend the day at the local park. When you look hard enough, you can find ways left and right to spend less, thus cutting back on your budget and staying within the amount you have set.
With careful planning and budgeting, you should be able to pay off bills on time, have money set aside for emergencies, and have spending money for the things you want. A family budget is necessary in this tough economic times, and is beneficial for any family.