How to Create a Family Budget

Everyone hates the budget word. However, if you want to stay ahead of your finances and tell your money were it goes and know where it goes, a budget is essential. Planning your family budget doesn't have to be a huge undertaking. It does take time and effort, but with the right tools, you can do it.

Instructions

Difficulty: Moderate

Things You’ll Need:

• bank statements
• receipts
• computer or paper and pen

1. Locate your last month or two of bank statements, pay stubs and bills. Using this paperwork, you can see how much money you have coming in, and how much is going out.
2. Make a list of all items that need to be paid, including anything that may only come up once or twice a year, such as car registration and homeowners insurance. Divide each bill into a category and set an amount next to it. If the amount is the same every month this is easy. If it varies, make an average from the last 3 months. If the item is paid throughout the year, divide it by the number of months between payments to put a monthly figure.
3. If you know how much you spend on groceries, eating out, gas or any other non-billable item then put those figures into categories as well. If you do not, locate receipts to determine the figure per month. If you still do not know, make a guess and evaluate your needs for the next month or two and adjust as necessary.
4. Write your income at the top of the page with any other income sources, such as part time jobs. Determine which bills will be paid when based on your paychecks and the bill due date. Start deducting your expenses from your income. Hopefully you will have money left over, although if you do you need to be sure you included all expenses including gifts, medical bills, etc. If you do not have money and are over your income limit you need to make some changes.
5. If you determine you need to make changes, start cutting out non essentials. Call creditors to negotiate for better rates, lower payments, or set monthly payments. If you are still struggling, consider selling unused items, getting part time jobs, or selling items you use but are busting your budget such as a huge car payment or boat.
6. Evaluate your budget every month and adjust where necessary. Look at your budget often to keep you on track an in control. Displaying it to be read by the family will make it easier to say no to non essentials (like that toy your child HAS to have!) buy simply reminding everyone that you are choosing to spend your money wisely.

Tips & Warnings

• Use a computer program to make the budget easy to read and change.
• Involve everyone if more money is needed to ease the strain. Kids may not be able to earn money, but they can help keep the household running smoothly when the adults must work more.
• Don't give up. Very rarely does a budget work with the first try.
• Avoid saying that you can't do or have something because the budget doesn't allow it. This puts a bad connotation on the term budget. Instead, say something that implies you are being wise with your money.