A budget tells us what we can’t afford, but, it doesn’t keep us from buying it.-William Feather
Creating a family budget is a crucial step in analyzing your family’s financial situation. The process is intense and tracking expenses can be mentally and physically draining. Once you take the time to take an honest look, you may find all kinds of treasures and mistakes that could put more money in your pocket.
The key to a successful budget is to document everything and be realistic. Start with a template and fill in the appropriate categories. Next, personalize the template to fit your needs by adding and deleting categories. For example, if you do not have children, that category should be deleted, but a category for pets may need to be added if applicable. You should be able to account for each and every dollar coming in and out. I have included a sample budget template:
Once your budget template is complete, you can begin cutting expenses if needed to meet you family financial goals. If you don’t use it or need it, cancel it. Some of the most common expenses to cut are:
- Gym/Club memberships (If you don’t use it; cancel it!)
- Bad grocery shopping decisions (Shop with a plan using lists and planned meals)
- Utilities (Reduce excessive cable bills, cancel land lines if you can, shop for better energy rates)
- Insurance (Reduce the coverage of over insured cars, shop for better rates)
- Subscriptions (magazines, newspapers)
Once the grueling process of categorizing money spent, money earned, and cutting expenses is complete, you can decide how to manage your money. Some families choose to use the envelope system, by using cash envelopes to manage their monthly spending and others may choose to do a complete overhaul of their checking/savings account systems and add or delete accounts. The updates made to your family’s financial plan need to be clear, concise, and understood by all parties involved to ensure a positive outcome. Always remember that even solid, tried, and true plans need tweaks and adjustments. I can almost be certain that it will be bumpy at first, but you will adjust and live happily ever after.
If you have any budgeting tips to share, please leave a comment below.