Budgets are not just for businesses or events. A family budget is a valuable tool to help you manage your family finances, plan for the future and save money.
You may think that budgets are only for people on a limited income. Alternatively, you may think that if you have a budget, you will never get to spend your money on what you want. However, budgeting is crucial if you want to eliminate financial stress and free up money to spend on the things you want.
A budget empowers you to take control of your spending. It is a clear picture of how much money you have, how much money you spend and how much money you need. A budget can:
Help you stay focused on your long-term goals – like saving for retirement and college education, and it can also help you save towards vacations and a new house or other large purchases because your budget is your plan for your money.
Prevent you from spending what you do not have – a budget keeps you informed about your plans for your money and awareness of how much you have and how much you need.
Expose unhealthy spending habits – a family budget lays out a plan for your money and tracks where your money went. Having it all on paper can help you see areas where you overspend or where there are opportunities for savings.
Help you save – adding retirement savings to your budget helps you commit to building a healthy nest egg so that you can enjoy your retirement years free from financial worry.
A budget will help your family get the most out of the money you have. With a budget, you are in complete control of your finances instead of being at the mercy of your next paycheck. In the sections below, you will find helpful tips for starting and sticking to a family budget.
Creating a budget that works for you and your family is not difficult, but it takes time. Your budget will most likely be revised and edited several times until you decide on a format that works for you. And that is ok. A budget is a tool that should be used regularly, not a static document. Follow these simple steps to get started on your family budget:
As you go through your receipts and payment stubs organize and classify all of your expenditures.
Your family budget can work like magic to put your family finances under control, but you have to spend time with it. It can be frustrating at first, as you figure out where to enter your information, but it is well worth the effort. Here are a few tips to make your working budget more user-friendly:
Plan a month in advance – Input your known income and expenses for the month ahead and see how they line up. This will show you how much excess is left in the budget for discretionary spending like the morning mocha latte or the streaming movies every Friday night.
Give yourself some slack – As you estimate expenses for the month ahead allow for some padding. If your electric bill is typically $85 in October round it up to $90, just in case you need a little extra. What is left over at the end of the month can go into savings or towards that vacation.
Spend with cash – When you know that you have $400 for groceries in a month, convert that amount to cash. When the money runs out, you will have to eat what is already in the refrigerator. Cash is a powerful tool to prevent over-spending.
Work with your creditors – After working with your budget, you may find that 90 percent of your bills are due the first week of the month causing some confusion and organization problems for your money-management. Most creditors will work with you to adjust billing cycles. Switch some of them to mid-month, and you will be able to even out your monthly budget.
Many people fear the family budget because it has the power to expose the unknown. However, the key to being in control of your family’s financial health is having all the information and making informed decisions about spending and earning. Get started on your budget today and get your family involved. Plan for the future, and work toward your financial goals together.