In times when everybody makes less and everything costs more, developing a family budget and committing to it is one of the best ways you can improve your financial situation and secure your family's future.
Knowing exactly how much income you have and how many expenses you have allows you to outline a road map that will help you reach your financial goals.
What sort of financial goals can a family budget help you achieve? Getting out of debt, saving for retirement or for your children's education, or saving for that vacation or boat are just a few of your options.
No matter what your financial objectives, a good family budget will help you move toward them in an organized and controlled fashion.
The following guide will help you take the necessary steps to establish a simple, easy to understand family budget.
Gather Information Before you sit down to start crunching numbers, you have to find those numbers.
You will need to gather accurate information about your income, and all expenses including debt.
Income Let's start with income.
If possible, review your paycheck stubs for the last 3 months.
If your income is always consistent, you can just look at the most recent one.
Make sure to include only the paycheck stubs for members of the family who will participate in the budget.
Note what your average paycheck amount is, as well as the next few payday dates.
Expenses Since this is designed to be a very simple, beginner's family budget, we will classify any bill that you pay on a regular basis (be it a utility, a credit card bill or a loan payment) as an expense.
List any and all regular payments on a sheet of paper or in an Excel document.
After checking the most recent statement on each account, note what day of the month it is due and what the average amount due is.
Some of the types of things that should be included in this list are: o Mortgage or rent payment o Auto payment o Insurance o Utilities o Cell phone bill o Cable o Credit card payments After you have all your monthly bills listed along with due dates and amounts, estimate your weekly cash requirement.
This will vary from family to family, and you may need to adjust it one way or another after a few weeks of living on the budget.
Basically, what you need to do is estimate a weekly amount of cash that you family requires for things such as: o Groceries o Gas o Lunch/dinner out or coffee o Petty cash o Tolls o Parking o Entertainment/miscellaneous For an average family of four, this amount can vary from $150 to $300 per week.
Putting it All Together Now that you have gathered all the information you need, it's time to shape it into a weekly budget that you can live with.
Start an Excel spreadsheet.
Create columns for the following: o Date o Description o Debit o Credit o Balance Starting at the beginning (or end) of the month, start listing the bills as they are due in chronological order.
Do the same thing with income, so that you are listing your paydays (and amounts) in between the payments.
You can set up a formula in Excel that will calculate the ending balance after each transaction for you or you can calculate it yourself.
Make sure you are also adding your cash allotment.
After budgeting at least 2 months ahead this way, it will be easy to see how much money will be left over for savings.