Budgeting Can Help You Save Money
When you hear the word budget, chances are you cringe just a little bit. Living within a budget is one of those things that is necessary for most people. The best way to think about it is not as a horrible chore or as depriving yourself of things that you enjoy, but rather as a necessity that in turn will help you get your money in order to live a comfortable life for years to come.
A family budget is important as it offers a way to save money and not become inundated with debt. A good household budget will remain realistic, allowing you to do things that you enjoy, but at the same time not spending over what you can afford.
How to Create a Family Budget
The first step to making a budget is to understand your cash flow. The backbone of a solid household budget is to know how much you spend each month on both your needs and your habits. A family budget will require you to track your personal cash flow, meaning how much comes in and how much goes out.
Figuring out your monthly income is the easy part, tracking all of your spending is what will take a bit of effort. You will need to collect all of your bills. This includes credit card statements, grocery bill receipts, gas receipts, and anything that you use cash to pay for. If you have not been keeping records of your spending, or do not have access to some of these receipts, you may need to track every dollar that is spent for an entire month before you can set up an accurate budget. You can use a notebook or an online program such as Microsoft Money or Quicken. These programs will make your budgeting much easier and are definitely worth the investment.
Once you have determined your spending habits, you then need to divide them into fixed costs and variable costs. Fixed costs include things such as your mortgage payment, car payment, and loan payments. Variable costs include things such as food, clothing, and entertainment.
Set Your Goals
The next step to setting up a family budget is to set your goals. Once you know what you are spending each month it becomes easier to determine the costs that you can trim from your spending and which ones that you cannot. Setting small goals is a great way to stay motivated and on track with your budget. For example, take the $2 you spend on coffee every morning and put it into a piggy bank or a jar. By the end of the month you will have a tidy little amount of money that can be placed into a savings account or money market account. Remember, budgeting does not have to be hard, but you do have to motivate yourself to do it.
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