How to Create a Family Budget and Stick to It

Budget all of your money for the month and you won't lose track of your spending.

Making a budget and then following it can help you track your spending and save money each month. When you begin to get a handle on where your money is going, you can identify and eliminate unneeded expenses. By putting everything you need to spend on paper or on a spreadsheet, you can make sure that the needs of the entire family are met without any surprises along the way. While the adults in the household should set up and monitor the budget, kids and other family members can contribute by stating their needs and identifying some of the small expenses that may otherwise be overlooked.

Things You'll Need

• Pay stubs
• Monthly bills and expenses
• Calculator
• Notebook
• Pen
• Calendar

Instructions

Make a Budget

1. Consult the pay stubs for each working member of the household. Add together the net pay for the month. If you are an hourly employee, use the average of your last few paychecks to determine your income.

2. Write the income total on the top of a page in a notebook. This is the amount of money you have to spend in a month.

3. List the expenses that you have each month. These usually include your mortgage or rent, car payment, insurance, utilities and any other amounts you pay each month of the year. Use a separate line for each.

4. Add an amount for food, including grocery and takeout expenses. According to financial expert Dave Ramsey, most people underestimate what they spend on food, so consult your receipts from previous months and estimate high.

5. Add together your monthly expenses and food. Subtract this number from your income. The resulting figure is what you have to spend on things that are not used every month.

6. Make a list of your incidental expenses for the month. Include things like birthday gifts, school supplies, car maintenance and clothing or haircuts. Allocate a set amount for each of these items from the amount of income you have leftover for the month. Once you run out of income, you can't spend any more; you'll have to reduce the amount for each category or eliminate a category entirely to make your budget work.

Stick to It

1. Post the budget in an accessible area and consult it as needed. When bills are paid or money is spent, cross the item off the budget.

2. Use cash for purchases. You can't overspend what you don't have. If your clothing budget for the month is $100, then bring that amount in cash to the store and leave the debit card at home.

3. Pay important bills first. According to Dave Ramsey, your food, mortgage or rent and utilities should be the first things you pay each month.

4. Have every family member present to create the budget each month. It is easier to stick to a plan when you have been involved in creating it.

5. Give kids and teens an incentive to stick to the budget by rewarding them at the end of the month with a new toy, piece of clothing or treat.

Tips & Warnings

• While it is helpful to list everything on paper the first time, you can maintain your budget each month using a spreadsheet or budgeting program.

• Refine your budget over a period of months. According to Dave Ramsey, it takes about four months to get a budget that accurately expresses your needs and expenditures.

• Don't forget birthdays and holidays; while these events don't occur every month, you probably spend money on them, so plan an amount in advance.

References

• "The Total Money Makeover"; Dave Ramsey; 2007
• CNN: Suze Orman's Money to do List
• Dave Ramsey: Budgeting Tips