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Starting a Family Budget
Posted By Crystal Stemberger On 06/21/2011 @ 2:21 pm In Family | 15 Comments
If you like to know where your money is going or are trying to cut back a bit to save for something special, a budget  may be a fantastic idea for you. I personally created our budget so we could avoid lifestyle inflation and throw the extra money towards our long-term goals. Families may want to create a budget to cover all of the normal expenses and family extras while still saving for long-term goals like retirement. Either way, a budget helps you stay on track. Here is how to start creating a budget like mine.
The first step to making a successful budget is to know how much you have coming in and going out. First, keep up with how much your income  is bringing in to work with. Then, I would highly suggest tracking every single expense you have for an entire month to get an idea of areas you may want to cut and to set realistic targets. Also try to write down all of the non-monthly recurring expenses too so you know what you’ll need to set aside each month to cover them.
For example, when creating your family budget, remember to include a monthly category for annual expenses like home owner’s insurance. We needed $3600 a year set aside for all of our property taxes and $840 set aside every year for our home owner’s insurance. That meant we needed to save $300 a month for taxes and another $70 a month for the insurance.
Once you have a record of everything you spent and earned, you can compare the two totals to see where you stand. If you are spending more than you are earning, you are going into debt or eating into your savings. If you are earning more than you are spending, you have the flexibility to save for your future or to pay down current debts. A family bringing in $75,000 a year may sound better off than a family bringing in $50,000, but it really depends on which family has the largest gap between what they bring in and what they are spending.
If you categorize all of your expenses, you can easily look down that list and be able to tell where most of your money went. Fixed expenses, such as the mortgage or child care payment, may not be easily modified, but you can definitely cut back on your variable expenses pretty quickly. I’d highly suggest cancelling any services that you do not regularly use or need. The first step is to handle giving up the easy spending before looking into harsher cuts.
If you are not willing or able to cut back on your expenses but would like to have more extra money at the end of the month, look into increasing your earnings. Part-time jobs around where you live can be turned into pretty easy money. You could also consider turning a hobby into cash or even sell some of your own stuff to sock some money away. For example, if you are a stay at home mom and don’t mind the idea of babysitting, taking care of one extra child during the weekdays can be a good way to bring in more than $250 a week!
Once you have a record of your income, expenses, and what you are aiming for overall, you can create a simple budget  on a piece of paper, in a worksheet, or at a ton of places online for free. The trick is to set realistic targets for each category of spending and to never overestimate how much you will be banking throughout the month. You will still need to track your spending for every category to make sure you are staying within the budget you set, but it will be much easier knowing that you have a plan.
I personally love budgeting and hope it helps your family too. Good luck!
How did you go about creating your family’s budget? If you don’t have one, what system works for you?
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