Tips on how to Create a Reasonable Budget for Your Family.
Living on a budget can seem daunting. Creating one can seem even worse. Believe it or not, knowing where to start is the toughest part. Here are a few tips for jump starting your home budget after you’ve built up a $1000 emergency fund quickly.
#1. Gather Your Financial Records
You need both your ingoing and outgoing records. Don’t leave anything out! You’ll need to find the total for both categories.
#2. Decide How You’ll Keep Your Budget
It’s possible to use pen & paper, but it will likely be easier to use either budgeting software or a simple spreadsheet. Many free resources are available online. You may also be able to use an app on your phone to track your spending on the spot. Consider how stringent you want your budget for your family to be and decide accordingly.
#3. Follow the Money
Once you have your totals, take a closer look at the “outgoing” side. Break each debit into subcategories. Many of the line items are non-negotiable (utilities, mortgate, etc.), but others are discretionary (food, clothing, date nights, etc.). If your outgoing total is larger than your incoming total, examine your discretionary spending and decide where you can make cuts.
#4. Input the Numbers
As your totals and categories become clear, you will be able to easily add your information into your spreadsheet, budget software or ledger. Your goal is to keep your outgoing expenses less than your income. If your debits are still the larger category, take a closer look and see where adjustments can be made.
#5. Consistency is Key
After you’ve created your budget, the trick is to stick to it! Keep your receipts and/or check your bank statement on a regular basis and look for the positive changes in your spending habits. Keep in mind, as your income category becomes larger, you’ll be able to work toward paying off debt (especially credit cards or student loans) and freeing up more money.
If you find it difficult to stick to your budget, try the “envelope method.” Write your categories on your envelopes and put the monthly allotted amount of cash in each envelope. Using cash often helps give you a visual of your money leaving your possession. Many people are less likely to spend cash as opposed to using a card. If electronic tracking is more appealing to you, look for an “envelope method” app for your phone so you can pull up your remaining balances before spending.
When you start to feel more comfortable with your budgeting, you’ll be able to choose what you’d like to do with your excess money. Be sure to consider your future (such as investments or an emergency savings) as money becomes available and remember to enjoy learning to manage your money on your own terms.
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