How to Start a Family Budget

A family budget is a useful tool to determine your current financial status, control and monitor spending and plan for the future. According to ConsumerCredit.com, the American Consumer Credit Counseling’s website, a budget allows you to control your money rather than letting your money control you. With a budget in place, you can also bounce back from emergencies in better financial health or get out of debt quicker. And considering that financial troubles are one of the top reasons for couples splitting, your family budget may even save your marriage.

Step 1

Track your current spending for one or two months. List small and large expenses, fixed monthly expenses such as loan repayments or utilities and even your children’s allowances. Download a budgeting worksheet from ConsumerCredit.com, create your own worksheet or use a budgeting software program such as one you can find at Simpleplanning.com.

Step 2

Calculate your total net earnings from every source so you know precisely how much money you have at your disposal each month. Include salary, commissions, alimony, dividends and other expenses. Compare your monthly expenses to your monthly earnings.

Step 3

Use your expense-to-earnings comparison to pinpoint where you’re overspending—maybe on restaurant dining—or where you need to spend more money—for instance, your retirement fund.

Step 4

Set short-term, mid-term and long-term financial goals, but be realistic so you’re more likely to stick to them. A short-term goal refers to thing you want to accomplish in the next one to three months, while long-term goals can be a year or longer. Write down these financial goals and keep them in a place where you can see them every day.

Step 5

Prioritize the steps or actions you will take to implement your budget and reach your goals; for instance, pay 10 percent more on credit card bills each month to reduce debt.

Step 6

Do a bi-weekly and monthly review of your budget to assess whether you’re meeting your goals.

Warnings

• If you’re in a financial crisis and think that implementing the steps above will not assist you quickly enough, contact your local non-profit Consumer Credit Counseling Service. Debt counseling can help you avoid legal action from creditors or filing for bankruptcy.

Tips

• Pay yourself first so you’ll be more likely to meet your savings and retirement goals.

• Keep all receipts or use sticky notes or a notebook to easily track your monthly expenses.

• Reviewing your monthly bank statements will also make it easier to track your expenses.

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