Setting a family budget can seem as easy and enjoyable as wrestling an angry grizzly bear. But learning to manage your family’s money better doesn’t have to be hard.
Read on to learn the basics of setting and maintaining a family budget.
Take a Look at Your Income
The first step when you’re creating a budget is to look at how much money you have coming in. For most people, the bulk of this will be from paychecks. Sit down and write out exactly how much income your family has every month.
If you have other regular sources of income, don’t forget to count those in, too. This can include investment dividends, gambling profits, child support, alimony, or anything else. If it’s in green on your bank statement, add it into your total.
Take a Look at Your Spending
Now that you know how much money you have coming in, it’s time to take a look at how much money you have going out. Your bank and credit card statements are a good place to start, though it’s also worth looking at your recent bills. Find an average for how much you spend on utilities each month, as well as how much you put on a credit card.
Once you have all your spending written down, start dividing things into categories. These can include money spent on groceries, on going out to eat, on new clothes, and on credit cards. Figure out how much you spend on average in each category every month.
You’ve figured out how much money you have coming in, how much you have going out, and where all of it is going. Now it’s time to start delving into the meat of creating a budget. You’ll want to start setting goals for how you want to change your spending habits.
Your goals may include spending less on going out to eat or paying down a credit card bill. Once you’ve settled on some financial goals with your family, start looking at ways you can cut back. If you want to cut your restaurant spending, set a limit on how often you go out to eat, and cook at home the rest of the time.
If you want to work on paying off a debt or building up a savings account, look at areas where you can cut back on spending. If you find that you spend more money on clothes than you need to, set a limit on how much you can spend on clothes each month. Use the extra money to work towards your savings or debt payment goals.
Keep It Simple
The most important thing when you’re creating your budget is to keep it simple. It’s easy to look at your spending habits and think you have to completely reform your financial life. But stick to a few simple goals, and you’ll find your budget much easier to manage.
Keep Track of Everything
The other big key to success in budgeting is keeping track of everything. This will make sure you don’t fall back into your old spending habits by accident. There’s a debate about the best personal finance tool, Personal Capital vs. Mint, so choose the one that works best for you.
Manage a Family Budget
Managing your family budget is a matter of discipline and paying attention. It will take some work at first, but when you start seeing the (literal) payoff, it will be more than worth it.
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