How to Make a Family Budget

Like it or not, budgeting is something every family should do. Creating a budget is necessary if you want to make sure your money goes where you want it to go. A budget doesn’t have to be painful; it’s simply a plan.

The first step in home budgeting is to look at how you are actually spending your money. This can be a real eye-opener for some people. Frankly, some people don’t want to see how they are spending their money because they know it probably isn’t going to be pretty. It’s better to figure it out now, though, before your current spending habits get you into trouble down the line.

Next, evaluate your spending and set goals for how you want to allocate your income. This is where you plug a certain amount of your income into each expense category to meet your family’s needs. Important: Give every single dollar a job for that month. Whether it’ll be spent or put into savings, it must have a place to go. This is how you’ll control your money, rather than having it control you!

The final – and ongoing – step in creating a family budget is to track your spending and make sure you’re meeting your goals. Your budget plan won’t necessarily stay the same every single month. You might need to alter your guidelines according to your changing needs, and that’s OK.

Resources

You might be wondering how you’re going to make up this budget. Fortunately, there are tons of resources available to help you write and stick to your family budget. Some people prefer a more detailed approach (me!), while others may want just a basic outline. What’s important is that you make your budget in a way that will work for you and that you’ll stick with.

My favorite budgeting program is called You Need a Budget. You pay once to download it, but then it’s yours and free to use.  YNAB helps you give every dollar a job and makes it easy to create sinking funds for occasional expenses, like property taxes, Christmas gifts and car maintenance. Several other software programs are available – some for free or preinstalled on your computer – including Quicken and Microsoft Money. Mint.com is free, but I find it more useful for tracking your spending than actually making a plan for the future.

*Here’s a simple budget worksheet from Dave Ramsey to get you started. Here’s another from the frugal living guide at About.com: Budget Worksheet

*This is a handy budget calculator to help you decide how much money to allocate to different categories.

Good luck making your family budget! Do you have any budgeting tips to share?

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