Understanding A Family Budget

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Steps To Start Your Family Budget…

Do you ever get locked up thinking about your finances? It’s all too common to get nervous about money and let that stop you from taking the steps necessary to get true control.

Don’t let nerves keep you from starting your family budget – it’s not as complicated as you might think!

Family Budget

Choose Your Budget Style: Paper or Electronic

Pen and paper can be just as accurate as an electronic budgeting program, but financial software certainly makes the job a lot easier. It also reduces errors.

If paper feels right, an accounting ledger doesn’t cost much and is designed for credits and debits. In everyday language, credits are incoming dollars and debits are outgoing. You’ll also need a calculator.

Electronic budgeting software like Mint.com is probably the easiest solution. Instead of writing down and accounting for each transaction manually, intuitive software creates running totals, makes suggestions, and shows how debits and credits influence each other for your bottom line.

Bring Everything to the Table

Everything that shows incoming and outgoing money, such as earnings statements, receipts, bills and bank statements, has a place at the budget table. First, separate them into two categories for incoming and outgoing, suggests U.S. News and World Report.

You’ll need a total for both categories. This is where many budgeters get a bit nervous, but don’t be. The incoming amount might be smaller than the outgoing, but a budget will help you control that.

Find Out Where the Money Goes

The outgoing category needs more attention after you’ve got a grand total. The next step is breaking debits into subcategories. Yours might be Utilities (electric, water, etc.), Secured Debts (mortgage), Unsecured Debts (credit cards), and Discretionary Spending (lunch, clothing, etc.).

Discretionary spending adds up fast. A few dollars here for movie tickets and a few more there for dining out sometimes total more than a fixed bill that you pay every month. This is the subcategory where you can create the most change.
– via Mint

Tips To Perfect Your Family Budget

Ready to take your budgeting to the next level? If you want your family budget to do you the most good and truly put you back in control of your finances, then taking a few simple steps to tweak and perfect your budget will do you a world of good.

Slash nonessential expenditures

In the event of a negative number, you are most likely overspending. The simple solution is much harder to do than to say: cut down on spending. Particularly, sacrifice first from your “fun” category. I know it hurts, but remember that this is temporary and leads to long-term stability. Redirect the “fun” money towards debts while becoming more resourceful, eating more meals at home and putting off your vacation.

Take off the mask

Be honest with yourself. Don’t pretend that everything’s okay if it isn’t. The easiest way to ensure that the budget is effective is to accept how you spend your money.  If you don’t want to believe your family, for instance, spends hundreds on dinner-and-a-movie outings every month, the budget will become your enemy instead of a helpful tool. One of the best ways to predict future spending is to look at past trends—and change them accordingly.

Review and revise your budgeting strategies

Check your budget at the end of the first month and each one afterwards. Did your spending habits change? Are you still on track? Ask yourself these questions and see if the budget is really helping you. If it isn’t, don’t be scared. The first one was a test run. Revise those percentages in your budget, see where overspending still exists, and keep trying. The virtue of budgeting is in the effort to manage money better on your own terms, not in making the ideal budget that will never be followed. As you get a better hold on your finances, things will change. You’ll be able to put more into an emergency savings account, more into investments, and more wherever necessary.
– via NerdWallet Credit Card Blog

Have you created a family budget yet? How accurate has it proven to be after a few months?

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