How to Find a Realistic Budget System

You’ve heard it before, “we just live pay check to pay check.” And it’s true. Most Americans do live just one pay check ahead of the game. That’s why most, if not all, of us could benefit from a budget. However, it’s one thing to plan out a budget; it’s another thing to be able to stick to that budget. Use the following tips to try to establish a family budget that you can realistically stick to and hopefully, you will find a way to save a little money along the way.

Instructions

Difficulty: Moderately Challenging

Things You’ll Need:

• Ledger
• List of all bills and payments
• Estimate of monthly spending
• Pay check stub

1. Make a list of everything you spend money on within a month. Itemize the list.
2. Divide the list into three categories Necessary, Unnecessary and Miscellaneous. Bills that must be paid like food and house payment, car insurance and things like this, should go in the “Necessary” category. Things that you make a choice to pay like a gym membership or a magazine subscription should go in the “Unnecessary” category. The “Miscellaneous” is things that you aren’t sure of yet. The “Miscellaneous” is for money you couldn’t account for specifically.
3. Add the total and deduct it from your net income. Estimate what you would typically spend on each item or service in each category, giving yourself a little bit of a buffer. For instance, if you think you typically spend $300 a month for food you may want to estimate $350 for the month instead. Add each category and deduct everything from your Net Income total for the month.
4. Keep a record of everything you spend for an entire month.
5. Make Amendments and get spending in order. Go to your “Unnecessary” and “Miscellaneous” categories and make necessary adjustments. Get rid of the things that you don’t absolutely have to have out of these two categories. This is the tricky part because under “Miscellaneous” you may have three trips to the movies for your family over the month. Yes, it’s true they weren’t “Necessary” but if you cut out everything fun you will likely backslide and eventually end up overspending. So, you need to cut out two of the trips to the movies and leave one. Then, maybe just budget to rent a movie once a month. Remember, this is a family budget and families need to have some fun. The “Miscellaneous” category should be completely eliminated. You should know exactly what you need to spend and what you want to spend, but all money should be accounted for.
6. Adjust your budget. Go through and see exactly what you spent compared to what you originally budgeted. See if you overspent or if the estimate you made just wasn’t realistic for that product or service. Make the needed adjustments.
7. Stick to the budget you have created. For the next year do everything possible to stick to this budget. Hopefully, you will be one your way to getting ahead financially.

Tips & Warnings

• Don’t cut out all forms of recreation and fun. Allow room for these in your monthly budget.
• If you go over budget don’t just give up and keep spending. Get right back on track.
• If you overspend in one area try to not to spend as much in another.
• Agree to stick to the budget for a year no matter how tempted you are to overspend.