If you’re single, it’s pretty easy to create a budget as you most likely have a pretty good idea of how much money is coming in, It’s also easy to track expenses because all you have to do is think about your own spending.
However, most families today have more than one source of income. And they have multiple spenders. This makes things much more confusing. For these reasons, many families lack of formal budget. But if you want to greatly improve your family’s finances, having and sticking to a budget is the real secret to financial success.
It’s tricky to make a family budget but here’s how.
1. First, inventory all of your income. If you have income that tends to fluctuate from month to month, use the lowest amount or average it out.
2. Next, keep careful track of all your monthly experiences. Keep all of your receipts for expenses and ask family members to turn in theirs at the end of each day.
3. Add up these monthly expenses. Make sure that you include debt payments, bills, groceries and everyday expenses such as lunch money and transportation costs.
4. Get your family together and discuss how you might be able to trim the budget. If you get input from other family members, this will help you determine which expenses can be cut down or eliminated and which are absolutely necessary. For example, you or your spouse could start taking your lunch to work every day, instead of eating out, or maybe there are extracurricular activities your children could drop.
5. Discuss with your family how you might cut down on things such as the electric bill, groceries and other necessary expenses. Think about such things as carpooling or taking public transportation, buying more generic foods, adjusting the thermostat, or shopping at several different grocery stores to take advantage of their specials.
6. Be sure to cut all unnecessary items out of your budget. Then re-figure the budget and see where you stand. For example, you might be able to live without membership in a certain club or you and your children could go to the library for books instead of buying them.
7. If, after you have done all of the above, you find that you have a surplus at the end of each month, save some of it. If you find that you’re in the red – that your expenses are more than your combined income – go back and rework the budget until you are in the black – and have more income than expenses.
Be realistic
The main reason that family budgets fail is because they’re not realistic. As much as you may want to cut down on your expenses, it’s easy to go too far. For example, you could cut entertainment completely out of your budget, but we all need a little diversion now and then. And you have to ask yourself if it’s realistic To give up all movies and all dinners out.
One way to handle individual expenses is to allocate a certain amount for each family member to spend each week. If it turns out that someone spends his or her entire amount before the week is over, you will need to reevaluate their expenses and an unjust if necessary.
The joy of budgeting
You can keep spending under control and end up with money left over at the end of the month by creating family budget. This will give you money to pay down debts or to save for future goals – like the Hawaiian vacation you’ve been dreaming of. However, for this to succeed, you need to monitor your expenses carefully. But your efforts will be well rewarded with less financial stress and more money in the long run.