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How to...
"Set up a Family Budget"
"A budget tells us what we can't afford, but it doesn't
keep us
from buying it."
William Feather
TABLE OF CONTENTS
PAGE
Family
Budgets:
A
Brief
Introduction
3
Why an e-book or how-to guide on setting up a family budget?
Why would or do you need a family budget?
The business case for and rationale behind family budgeting
Benefits and advantages of a family budget
Family Budgets Defined
12
What is a family budget?
What constitutes a good family budget?
What should it contain and look like?
The Family Budget Process
19
How to set up a family budget?
Some practical suggestions and a step-by-step summary of a
family budget process
Hints, tips, tricks and tools for setting up a family budget
How should a family budget be used?
Final Thoughts On Setting Up A Family Budget
53
"Modern man drives a mortgaged car over a bond-financed
highway on credit-card gas."
Earl Wilson
2
INTRODUCTION
"The average family exists only on paper and its average
budget is a fiction, invented by
statisticians for the convenience of statisticians."
Sylvia Porter
Unlike the quote provided above, seemingly reflective of general
opinion on family budgets
today, we will attempt to take a much more positive approach
to budgeting, as a family
oriented, user-friendly, financial management and planning
tool and life-enabler.
However, when reflecting on family budgeting and inquiring
as to why not more families are
actually using it, it becomes self-evident that similar skepticism
runs rampant and deep in reality
and society, even globally so.
Once you start probing family budgets, expending time and
energy researching the subject in-
depth, it becomes quite clear, that most families are caught
in a vicious, almost never-ending
cycle of "What comes in must go out."
Most families might feel that budgeting is a futile effort,
unnecessarily burdening them with
thoughts and ways, to go broke methodically and slowly, without
the creature comforts and
indulgences of our human modern-day society.
Others might voice that they feel as if they are merely throwing
money away, in a never-ending
and dizzying spiral of spend, spend, spend. People are getting
deeper and deeper into debt, no
matter how hard they try to get out of it. Questions are then
raised : How do we stop these
courses of action? How do we change the thinking around family
fiscal discipline?
Put simply, in "How to set up a Family Budget", we focus in
on how to empower families to set
up better, more realistic budgets, stick to them and celebrate
their successes (and learn from their
failures!)
Families eventually do have a monthly surplus, see their savings
start to grow, consolidate their
debt, set aside discretionary funds and personal allowances,
build their wealth and become more
3
aware of their pro-active involvement and responsibility
regarding their lives and finances. This
is when excitement builds and fundamental thought patters
as well as spending attitudes are
changed.
Budgeting is seen as an accurate measurement of success when
significant behavioral
transformation is taking place on the landscape of the family
budget, spending habits and
financial patterns we observe over time!
Do you ever feel that you do not have enough cash at the end
of the month to pay bills, buy
necessities of life? Are you barely making a dent in your
credit card debt balance, no matter how
hard you try?
Here is a reality check for all of us: if we choose to spend
it, it is gone for good. We cannot
spend it on anything else. Are you perhaps worried about a
nest egg for your golden years or
savings for early retirement? Then you have arrived at a source
that can provide some prudent
tips on how to start, finish, implement, stick to, revise
and refine a family budget.
The family budget is a dynamic process, even more so than
a mere static work-product, result,
process-outcome or document. It will, can and should change
over time. It becomes a barometer
of a family's fiscal circumstance, resources and health.
Maybe budgeting is not as much about reflecting on what you
cannot have, but more about
thoughts on how to stretch, invest and spend your earned dollars
more wisely. In short, it is about
making your money going further.
This quick-reference how-to guide was developed to assist
you with setting up your own
personal, household and family budget, to help you with
all of the above and more!
A couple of general money-savings will also be provided in
these pages. There are also thoughts
and spending patterns that need to change, in order to become
fiscally more disciplined and
many techniques, attitudes, habitual behaviors that we need
to un-earth, evaluate and possibly
change, before you even start budgeting.
4
For example, being a bargain hunter looking
for good buys, cutting down on careless spending,
being on the lookout for careless credit card spending and
letting the person who handles money
best in your household actually take care of it, are all good
examples of what we mean.
For most households, a budget is no more than a spending plan.
Any spending plan can help you
see where your money is going. It fits your spending to your
income. It reflects how we get the
things we want and need most, while being ready and prepared
for bills we must pay every
month.
For most families it is simply about making a budget you can
live with and stick to easily. It is
not a difficult exercise, but one most people fear, avoid
or dread because of the unknown and
perceived complexity of it (sometimes wrongfully so!).
Part of the goal of this guide is to demystify family budgeting
and highlight an easy
systematic process to setting up a quality family budget.
Many things actually drive our expenditure. We choose to spend
our money on things we value,
need, prefer or consciously choose. For some it is clothes,
for others it might be something as
simple as taking that yearly vacation.
Whether you are making financial decisions for yourself or
your household, you might have to
make some serious choices and adjustments regarding your financial
freedom and situation.
"How to Set up a Family Budget", is a quick-reference,
easy, how-to guide, meant to take you
through the typical, who, why, when, what, where and how questions
typically asked when
considering fiscal planning for the household and or budgeting
in general for your family need,
means and circumstance, now and for the future.
Budgeting is not just about restricting spending and living
a cheapskate life. It is about
insights, wisdom, informed decisions, action and sustained
discipline when it comes to your
household financials.
This guide will invite you to learn more in these pages about
systematic budgeting. It focuses on
practical application and zooms in to apply these "best practice
suggestions" in your own home.
It empowers you to put together a dynamic, financial plan
that suits your pocketbook, means and
circumstance.
5
Financially speaking, assess quickly where you think you and
your family are today.
· What kind of a picture do you have?
· Could you come up with something?
· Did you have the data and numbers you needed?
· Would you be able to plan for where you want to be and start
living your life today as a
fiscally sound and disciplined family with the information
you have at your disposal at
present?
Money makes the world go round! It is no secret that some
of us have more, some have less. We
deal with our own personal finances and cash management distinctly
differently.
Households have varying needs, means and circumstance. Our
money-management skills are
also at different levels, as is our debt and savings!
Budgeting has to do with most of these perspectives and reflections.
The purpose and goal of family budgeting is:
· financial situational analysis and informed awareness,
· (ii) cutting cost,
· (iii) gaining control or curbing spending and
· (iv) Starting to save, building up wealth and liquid assets
over time.
There are many phases and steps to go through when creating
a budget.
If you are looking for ways to manage your money better,
making it reach and stretch
further, and providing you with financial security and
a more solid future, then you have
come to the right place.
In this brief introduction on family budgets, we have already
introduced our first couple of
key questions
Why an e-book or how-to guide on setting up a family budget?
Why would or do you need a family budget?
What is the business case for and rationale behind family
budgeting?
6
What are the benefits and advantages of a family
budget?
We elaborate a little more below. For most people, a family
budget is the equivalent of a
simplistic process: money is earned and comes in; money is
spent and moves out!
It is a fluid, easy-flow, one-directional, cash management
process. It is driven by daily life, a
spending-orientation, or no plan at all!
For most families, income is also fixed and outflow typically
increases over time, as the needs of
the family fluctuates and changes. Loading up on debt is also
very typical for the majority of our
families. If this sounds very much like a vicious circle,
it is. Most families are caught up in it
and constantly battle to get out.
Mostly, we think that we wisely spend our money on necessities
like food and clothing, gas and
household or family needs, but can rarely put a finger on
where the money actually goes, let
alone produce a budget!
A good place to start is to monitor these expenses.
Take stock of your fiscal situation. Start with assessing
where exactly you are in your financial
life and circumstance. Most of us think we know, but we really
do not.
That is, until we take the time to actually list, study and
analyze the situation. Figure out what
your financial worth is, look at all financial goals, and
set a timeline for reaching them. Does this
sound like an action plan? Where do you start?
A good suggestion is your bank statements, tax return and
recent current credit report a
financial asset statement if you will -and an overview of
the current situation.
The premise is simple: you can not get to arrive where you
want to be if you do not know where
you are today, what it will take to get where you need to
be and how to get there.
A well thought out, planned and realistic budget will serve
as a roadmap to get you there. It is a
financial tool facilitating your financial dreams, goals and
aspirations, making them become a
reality. Budgeting will enable you to actually reach your
financial targets and set goals.
7
WHAT IS YOUR CURRENT FINANCIAL STATUS?
How do you define financial worth? Is it cash in the bank,
savings and checking accounts,
RRSP's, stocks and investment portfolio?
Remember, anything you have that is of value counts. All your
assets form part of your financial
picture and health. Ask yourself: What is your take-home pay,
after deductions? How are you
paid? Is it monthly, weekly, bi-weekly? Then you need to budget
accordingly!
Think about all other sources of income, temporary, seasonal,
part-time - extra income, found
money and bonuses that you might have.
Maybe deciding to leave it out of your family budget altogether
is wise and advisable? (we will
delve into this question a little later).
Try to find ways to do without some small creature comforts
and pleasures to reap bigger
rewards later.
Starting small, early and now, with discipline and commitment,
a steady, consistent pace and
amount every month, tracking and optimizing financial phenomena
like `compound interest'
(which we will describe later), will all feed into this process.
We will take this journey into budgeting together to see how
it can change lives: yesterday, today
and tomorrow!
Back to listing assets and thinking about savings: consider
all banks, savings and loans, credit
union accounts, money market accounts, certificates of deposit,
Christmas club accounts you
might have. ALL LIQUID ASSETS that can be readily turned into
cash need to be included.
Consolidate accounts if you have too many accounts spread
out and save on banking fees.
Improve tracking actual spending better and more easily. Earn
higher interest and have less
exposure to identity theft or fraud by getting a good handle
on your current situation.
8
For most individuals and families alike, this
step is quite a revelation. It forms the basis and
baseline for deeper analysis and scrutiny.
Other assets might include things like: art, precious metals,
sculptures, paintings, collections,
antiques, jewelry and more.
Most of us are used to having a short-term focus on money
and budgeting. A paradigm-shift is
required to move us towards a more in-depth, longer-range
view and planning.
Set short, mid and long term goals, have a definite structured
plan, read up on family budgeting,
personal financials and fiscal management strategies. All
of this will help us focus on what is
important for our needs, requirements and circumstance, while
keeping financial discipline and
budgeting in the forefront of our busy lives.
This is never an easy task amidst all the hustle and bustle
that is our daily lives!
Most of the published literature on family budgeting in general
centers around how to get out of
debt, stay out of debt and live a full and prosperous life.
Some suggest frugal living is the answer and offer `your money
or your life' perspectives, where
you cannot necessarily have both. There are many examples
advocating the cheapskate monthly
makeover that focuses on shaving costs off expenses and living
frugally.
Market providers both online and offline, offer various budget
kits which offers worksheets and
more and there is always the handy tip-like Coles notes and
the pocket idiots' guide to living on
a budget.
Other sources focus on becoming totally debt free, debt proofing
your life, getting a life and
choosing simplicity or how to address credit card debt and
expenditure.
This `how to' guide is a little different.
We have chosen to take a very hands-on, practical approach
to fiscal management and get you
started, walking through the budgeting steps and set you up,
sending you off, well and good, on-
course to solid budgeting in your family and household!
9
This brings us to the Who, What, When, Where, Why and How
part of the discussion. These
form the dynamic, interacting and inter-dependent elements,
systems and processes that form
"family budgeting."
Who? Every family situation is uniquely different and distinctive.
There is no one-size-fits-all
answer and solution for everyone.
Some of the tips in this guide might apply to your unique
means and circumstance, and others
may not have any significant impact or practical application
at all.
In general terms, you will find handy ideas, hints, process
steps, practical savings suggestions
and budgeting that might have gone unnoticed before.
The information provided is general and should be evaluated
on an individual and contextualized
basis. Remember to consult a financial advisor when making
fiscal decisions that could affect
the financial health, well-being and future of you and your
treasured family.
There are various different families in question here too:
single-income, single-parent, blended
and/or extended families, double-income households, stay-at-home
mothers working part-time
from the home to make ends meet, social-supported and/or subsidized
families, families at risk,
divorced household with shared parenting and financial responsibilities,
debt-ridden or
bankruptcy families and numerous others. We hope to offer
something for everyone.
What? Family budgeting is a structured process and planning
activity, dealing with a family's
financial resources and context.
This hands-on approach puts expense items into categories
as another helpful strategy. This is
done to get a better handle on the current situation and offers
somewhat of a reality check to
most that choose to undertake this journey.
Some of the categories could be:
Obligations list each item under headings like: home: mortgage
or rent; association fees
and professional dues; insurance: health, auto, home, renters'
and life; tuition, day care;
loans: car loan, student loan, bank fees and interest; taxes,
property taxes and so on.
10
Necessities again list each item under headings
like : food, groceries, gas, yard
maintenance, security, pest control, utilities: gas, water,
electric, garbage, sewer; school
lunches, household supplies, car maintenance, monthly parking,
housekeeper, household
repairs, internet service, dry cleaning, cable TV and more.
Pocket expenses treat this as a whole category, covering:
lunch at work, snacks, sodas,
coffee, drinks, parking, tolls, newspapers, magazines, batteries,
postage, shipping, mail
Family Allowances another whole category including items
like : parties,
entertainment, weekend outing, movies, concerts, other entertainment
and events, home
improvements and decorating, magazine and other subscriptions,
dining out and fast
food, furniture
Personal allowances - clothing, hobbies, personal recreation,
books, CD's, manicures,
hair, alterations, shoe repair, personal gifts, luggage, night
out with friends, gardening,
films, processing, video rentals, sports/recreation, family
gifts, contributions, donations,
computer software and other related items.
When and Where? In the interest of brevity, we combine the
next two facets. Our best
assessment to answering when and where the best place and
time would be to start a family
budget would be to answer unequivocally: HERE AND NOW!
It demands attention as it directly affects our daily lives
and well-being. Without delay,
hesitation or postponement, we need to step up and protect
our family interest, financial health
and future.
Accounting brings accountability! A wealth management guru
is often quoted as saying. This
rings so true. It is hard to ignore, if we are confronted
with objective cold hard financial facts that
tell us that we are in trouble.
Why budget? Families, as mentioned before, have diverse reasons
and motivations for
budgeting. Briefly summarized, people budget for a couple
of reasons:
To gain control of their financial life, monthly bills and
spending
Be prepared and avoid surprises
Save for a major purchase
Opt out of a vicious circle of ever-spiraling debt or spend-now-pay-later
thinking
Expand their lifestyle(s)
Retire early
11
Eliminate money as a source of tension and
topic for argument
Rediscover that the best things in life are FREE!
Becoming self-reliant and empowered to know that debt does
not rule their lives
anymore!
We promise even more on this a little later!
Family Budgets Defined
How to budget? Some general strategies are helpful in assisting
families to set up a budget or
budget better.
The first significant step is to change your thinking about
money, shift your attitude
toward spending, actually focus on saving money, planning
ahead and driving for success
Develop a greater awareness of how you earn, manage, save
and spend money
Awareness of how others would lure, entice and want you to
spend your money
(advertisers, retailers, and manufacturers)
To stop participating and playing the "Keeping-up-with-the-Jones's
game," living with a
false sense of wealth and security, while over-extending your
self and financial resources,
beyond your means. Do not envy others and lust after things
that they might have or
even worse, get deeper into debt to compete or keep up appearances.
It is
counterproductive and can ruin lives!
Delay purchases learn and do, sometimes without having to
buy!
Set solid financial and budget goals for yourself and your
family that you can work on
individually and collectively to achieve together
Set spending limits and stick to them
Do not make ends meet utilizing credit cards, stay away from
ATM machines, cash, cash
advances, do not cheat on your budget
Understand your income know where the money is coming from
and how it varies
throughout a one-year cycle
Understand your expenses monthly and irregular, unexpected
expenses
Set a few realistic financial goals
12
Know your own habits, spending, temptation,
and where the areas of risk and exposure
are.
Set up savings and spending mechanisms that work, reserve
and growth accounts and
have the right number of credit cards
Make an income plan detail is important
Plan your obligations and must pays smooth out large size
bills with reserve accounts
Plan your necessities and look for ways to economize
Set aside pocket money for daily incidentals
Create a family allowance to cover entertainment
Create a personal allowance
Balance and consolidate, wise decisions and trade-offs agree
and stick to it
Live happily on a budget
Welcome to frugal living mode! Cutting back on living expenses
alternatives for simple
living
re-examine why you work and how you live
stop tossing your hard-earned cash away
shopping, overwork, stress and debt (some refer to this as
an illness quipped:
`Affluenza'!)
celebrate when you have money left over at the end of the
month indulge a little and
reward yourself rewarding patience and persistence! Not
just the doing good and
sticking with it
`How to set up a Family budget', is advocating a new
code of fiscal honor for our families, so
to speak. It proposes family budgets, that ask for wisdom
(best choices and decisions), discipline
(sticking to it), honesty (no cheating), persistence and celebration
when we do it right!
THE RATIONALE AND PROCESS OF BUDGETING
Here are twelve good reasons to get you started:
1. Family budgets are used as a baseline, analysis-tool
and roadmap. It is a useful tool and
guide. It tells you whether you are headed in the direction
you want to be headed in financially. It
helps you to move from spending to saving and good fiscal
balance, management and
responsibility.
13
You may have goals and dreams, but if you do
not set up guidelines for reaching them and you
do not measure your progress, you may end up going so far
in the wrong direction you can never
make it back. Can you imagine the government or a major corporation
operating without a
budget? No, and neither should you.
2. It is often described and justified as an empowering
enabler. A budget lets you control
your money instead of your money controlling you.
3. A budget is a realistic estimate and true reflection
of current circumstance and means, a
type of financial situation-analysis that will tell
you if you are living within your means.
Before the widespread use of credit cards, you could tell
if you were living within your means
because you had money left over after paying all your bills.
There are lots of family budgeting tools available on line
that make it a fun and enjoyable task
and activity, to assess and analyze your family's financial
situation with minimum effort.
(www.MoneyPants.com)
There is also lots of free financial software and most of
it sets up easily and provides you with a
detailed family budget online. It manages your finances, hassle-free
and almost effortless.
Well, almost! It will require input and minimum effort through
hands-on involvement in setting
it up, populating, maintaining and editing it. Mvelopes.com
is a good example of market
offerings that are available at no cost to you, just waiting
for the motivated family budgeter to
embrace and try it out!
Some websites offer free financial newsletters by e-mail,
with lots of money saving tips, budget
advice, and other relevant personal and family-related financial
information
(www.planabudget.com).
The availability, accessibility, virtual marketplace, ease
of use and more of credit cards has
made the need for family budgets much less obvious. Many people
do not even realize they are
living far beyond their means until they are knee deep in
debt, struggling to make ends meet and
sinking fast into murky financial waters.
Budgeting is and can be a life and money saver, a reality
check, BUT ALSO a remedy!
14
4. A budget can help you meet your savings
goals. It includes a mechanism for setting aside
money for savings and investments.
5. Following a realistic budget frees up spare cash so
you can use your money on the things
that really matter to you instead of frittering it away on
things you do not even remember buying.
6. A budget helps your entire family focus on common goals.
It is unifying families in
mutual purpose and effort, working together towards a successful
outcome and reward.
7. A budget helps you prepare for emergencies or large
or unanticipated expenses that
might otherwise knock you for a loop financially.
8. A budget can improve your marriage. A good budget
is not just a spending plan; it is a
communication tool. Done right, a budget can bring the two
of you closer together as you
identify and work towards common goals and reduce arguments
about money.
9. A budget reveals areas where you are spending too much
money, so you can refocus on
your most important goals.
10. A budget can keep you out of debt or help you get out
of debt.
11. A budget actually creates extra money for you to do
use on things that matter to you.
12. A budget helps you sleep better at night because
you do not lie awake worrying about
how you are going to make ends meet.
Nevertheless, despite all these wonderful reasons quoted above,
people are still hesitant to
commit to family budgeting as standard practice in their households.
We might again want to
probe a little deeper still and ask why?
TOP THREE CAUSES OF BUDGET FAILURE
Many people make an honest attempt to budget, but become discouraged
and give up before
they are able to accomplish any significant financial gain.
The top three causes of budget failure
come into play before you even begin to set up your budget.
Awareness of these budget busters,
is your first line of defense in the Battle of the Budget.
Budget Buster #1 - Negative Attitude
15
It cannot be emphasized enough--a positive
attitude about budgeting is essential to your success.
If you think of budgeting in negative terms (such as a financial
diet, financial handcuffs,
restrictive, penny-pinching, a sacrifice, etc.), you are sure
to fail, unless you are a martyr or a
masochist who finds some strange reward in a punishing experience.
For purposes of this article,
we will assume that you are neither.
A positive attitude means you think of a budget as a means
to an end--a way to achieve your
dreams and goals--and that postponing the instant gratification
of spending all the money you
earn is worth the rewards you will earn in the end.
Budget Buster #2 - Lack of Motivation
What is your motivation for budgeting? Are you trying to appease
a nagging spouse? Following
the terms of a debt repayment plan with a consumer credit
counseling agency? Complying with
an agreement made in bankruptcy court? These are not bad motivations,
but they are external
pressures and will probably not be easy to maintain over time.
The best motivations are
internally generated: do you honestly believe that budgeting
can help you meet your goals?
If you need a little help in the motivation department, see
"Twelve Reasons Budgeting Can
Improve Your Life". A quick re-read of these will surely
inspire and ignite a motivational spark
or two!
Budget Buster # 3 - Unrealistic Expectations
What do you expect to gain from instituting and following
a budget? Do you think that setting up
a budget will reveal large caches of hidden cash or that the
budget fairy will sprinkle fairy dust
over your budget and magically transform your spending habits
after a month or two of tracking
expenses?
The reality is that budgeting is an endurance event--those
who stick with it, through thick and
thin, will come out ahead financially. Do not expect miracles.
What you WILL see if you stick
with it is steady, measurable progress towards the goals that
really matter to you.
16
Starting a budget without having a positive
attitude, internal motivation, and realistic
expectations, will probably set you up for failure. You can
greatly increase your chances of
success by ruling out the three biggest budget busters before
you even begin.
Family budgeting just the thought of it makes most of us
cringe. However, mostly, we do
attempt to curb our spending and live within our means. Others
fall into bad habits, habitual
spending patterns or impulse shopping and over-extend themselves,
landing knee-deep in debt!
Ironically, one of the first remedies for any debt consolidation
or repair strategy, is to take a
long hard look at the budget and financial patterns within
the household! It is almost like
running a diagnostic.
To take a closer look, you are in effect placing your family
dollars under a magnifying glass
and microscope. This can prove both challenging and painful
for most people. We hope to
alleviate some of that initial discomfort and apprehension
with this handy step-by-step
guide and tips.
Most financial advisors will tell you that you have to reward
yourself for good fiscal
responsibility, discipline and habits, to increase your motivation
and success levels.
Budgeting is the first step, sticking with and to it, a close
second and the sometimes overlooked
but ever-important reward, has to keep the motivation going!
To repeat and continue to
experience the benefit of the budgeting cycle and discipline
could be an uphill battle, but there
are calmer seas ahead.
Cash management, savings, planning for retirement, setting
financial goals etc. active and hands-
on, is becoming increasingly important for the survival and
well-being of our families
everywhere.
Be your own best expert with coming up with new ideas on how
to save money, budget better
and spend less! Your unique strategies stem from a deep understanding
of your own situation,
demands, and needs. Discover which tips and ideas work best
for you. After all, fiscal
management and finances are definitely not a one-size-fits-all
solution environment. It is
personal, customized and unique.
In the following section, we will briefly refer back to the
family budget defined and look at some
of its elements and criteria, purpose and functions.
17
What is a family budget?
What constitutes a good family budget?
What should it contain and look like?
What is the family budget again? It is a pro-active,
hands-on approach, focused, technical and
disciplined strategy to getting a handle on the current financial
situation in the home and family,
It concerns setting realistic, SMART financial goals for the
household, sticking to it, celebrating
successes, learning from failures and trying again if you
do not succeed or get it right the first
time round .It is about shifting focus completely from a mainly
spending to a savings orientation.
Cash and money-management 101 for everyone!
We have laid out what a family budget is, does and affects.
A brief mention of what constitutes
as good family budget and the elements that it contains as
well as its appearance, format and
functional role follows.
All of us have a wish list of new things that we want.
There is always things we would find
and places to spend our money. Take the time to make a list
of these things. Let everyone who
shares cost in your home to have input into making and finalizing
this list. Write down what
you want most. Beside the goal, write how much it will cost.
Split it into goals with ongoing
costs and the cost per month, and goals with a one-time cost
and list the actual total cost
(including all hidden fees, taxes, shipping and or other charges
that might apply. Now, next to
these columns, start to prioritize these goals.
Which goal comes first? You need to decide which goal on your
list should come first. Talk this
over with the other members of your family. If you live alone,
think it over yourself. Try to list
your top four goals and decide what you can fit into your
budget.
A `good' budget is in the eyes of the creator or beholder
alike! Some suggested, but by no means
comprehensive criteria follows:
Budget is both process and product
Collaborative, engaged, hands-on effort
Characterized by communication and mutual agreement
It advocates involvement and exchange
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It is real-time and reality-based
Factual
Accurate
A financial check-up and check-in on the family finances,
household dollars, situations,
behaviors, and resources.
An action-plan, future-oriented
Offers a peak into the past, scrutinizes and enlightens the
present, while planning and
promising a future
Goal and results oriented
The Family Budget Process
This brings us to the family budget process. We might ask
questions like:
How to set up a family budget?
How should a family budget be used?
Insights around the tools and techniques of family budgeting
could also be useful:
Practical suggestions for setting up a budget?
A step-by-step summary of a family budget process
Hints, tips, tricks and tools for setting up a family budget
Stay tuned for more...
To get us started and in order to set up a monthly budget,
follow these five easy steps:
Step one:
find out your monthly take-home pay
Step two:
find out what your expenses are
Step three:
find out how much you spend on each expense
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Step four:
see if your monthly expenses match monthly take-home pay
Step five:
Balance your budget. This means in your family budget you
need to ensure that
you are spending matches take-home pay. It might indicate
that you have to cut
back on spending to balance.
It sounds too good to be true and too simplistic. However,
in the end, that is all there is to this
family budgeting process! Initially at least. Let us look
at these steps one at a time.
Finding out your monthly take-home pay
Your income is your pay, after some money is deducted. Think
taxes, insurance and Social
Security. Answer the following questions:
What is your monthly take-home pay? Do other people share
expenses in your home?
As mentioned before, total all of the households' monthly
take-home pay. This will include all
sources of income for all contributing members of the household.
Finding out what your expenses are
This brings up other pressing questions:
What are your monthly expenses? Where does the money in fact
go every month?
Most people are surprised to learn that it may go for things
that we do not need at all. Writing
your expenditures down provides us with the unique opportunity
to visualize and find out if any
money goes for things that we do not need or want.
Here is a short list of expenses that many people have.
Put a check mark next to ones you
have, then write down any expenses you have, that are not
on the list.
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Necessities like food
Clothes laundry dry-cleaning
Car and transportation expenses: gas, oil, parking, license,
plates, car repair, train fare or bus
fare
Rent, mortgage payments, heat, electricity, phone, water,
property taxes, house repair,
appliance and repair, furniture, small items for home, cleaning
supplies on the yard care,
Medical and dental expenses: doctor, dentist, drugs, hospital
or clinic.
Savings: short to medium term for something soon, a future
purchase, emergencies,
investments.
Installment payments: car, furniture, appliances, charge accounts,
credit card accounts, loans.
Pocket money, personal allowances, tobacco, beer, wine and
hair care.
Entertainment, movies and eating out Recreation, sports and
equipment, club membership,
newspaper, magazines, cable TV, records and tapes, DVDs videos
and other multimedia,
vacation, letters and postage.
School bills, books, room and board at school, workshops,
special training courses, lessons,
music and more.
Donations: church or synagogue, charitable giving, charities,
other and gifts
Insurance: (if not deducted from your pay check): life, health,
house, car and property
Taxes: (if not deducted from your pay check): Federal, state
and local income, social security
Which other ones could you list ?
Finding out how much you actually spend on each expense
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This is the hard part, where some thought and effort will
have to go into the process to ensure the
most accurate information is recorded. This will give a realistic
and real-time estimate that is
reliable and accurate.
In this section, you need to ask yourself how much each item
on your list actually costs how
much each item costs you a month.
The following estimates and guidelines could prove helpful
to you as you set up your family
budget:
Monthly bills that stay the same car and rental payments
Monthly bills that change utilities, phones and more. Find
costs per month for say six
months, add them up. Take this number you have calculated
and divide it by six (the amount
of months) to get your average cost. This is the number you
will be using for your budgetary
exercise.
Bills that come every three or six months the number for
every month will be used in your
budgetary process.
Bills that come annually, meaning once a year divide the
amount by 12 months. The
answer is your monthly budget number.
Bills that come more than once a month food, gas, lunch
and family fun. This is a category
to watch very closely, as it is a contributor to this "bottomless
pit", we sometimes feel and
see our cash disappear into.
Unexpected expenditures or surprise bills what you can afford
to set aside as a buffer or
emergency, contingency fund - (look at the last three years
or so and see what kind of
unexpected expenses you and your family faced). Use an estimate
that makes sense to you
and divide the annual number by twelve months to get your
monthly number.
Finding out if monthly expenses match monthly take-home
pay
22
Compare your total expenses with your take-home
pay. A couple of results and scenarios could
be staring you in the face:
Positive result: Income more than expense you can either
spend or save!
Negative result: Expense more than income spending more
than you have, you might have to
cut costs and try to save some money to cover the bases!
Whichever of these outcomes you are faced with, knowing is
better than not knowing. For some
this might bring little comfort and relief, but people in
general, find this exercise useful to make
an unknown more measurable. It makes us both accountable and
wanting to act, faster and that
sense of urgency and momentum is just what the family budget
process needs!
Finding ways to balance your budget
Earlier it was stated that a good budget would mean income
would be equal to expenses. Having
a small surplus is no guarantee by any means. You might need
this to cover and unexpected rise
in oil and gas prices or a larger grocery bill due to a party
you are hosting at home.
This almost brings the concept home of a sliding scale, flexibility
and discretionary buffer
categories in budgets to absorb this give-and-take roller-coaster
ride that is family budgeting.
The good news is whether you are in the red so to speak or
just scraping by, managing to save
nothing or maybe a little, or even a lot, this process will
highlight areas where your attention is
needed right away. It gives direction and purpose and assists
families to formulate their spending
plans, goals, re-visit their needs, dreams and goals.
Balancing the budget is no easy task. Here are a few steps
that we can suggest to make your life
a little easier:
Find out how much you need to cut from your expenses
Decide you can make cuts in your expenses and be detailed
Re-balance your income and expenses after you've made these
cuts
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A word to the wise: Do not make cuts in your
budget that you cannot live with in real life. It is
extremely important to remain realistic and keep your real-time
expenses and living realities in
the forefront of your mind when you make these decisions.
If you're getting out of a situation where you are in debt
and short of cash, you have to try to
curb spending any way you can. Cutting those expenses are
crucial, not only because you are
over budget.
We mean that there might be other reasons, like adding a budget-line
to your overall planning for
your family vacation. Realistically, we cannot add and address
new needs and goals before we
have fulfilled our duty and responsibilities.
Cutting a little here and there will mostly do the trick
cancel that newspaper subscription for
the papers that just land in the recycle box or garbage anyway.
Do you need all the specialty
channels and packages on your Cable TV options? Can you live
with giving some up?
There is always the specter of rising prices and interest
rates, inflation and more to cope with as
well, so building preparedness for that into your budget is
also a priority. Whatever we can do to
cut our costs and expenditure will benefit our pocketbooks
and family budgets immensely!
Cutting back on things you need the least is a good starting
point if you are at a total loss as to
what and how to give something up, add a new line into your
budget or plan for the future or
inevitabilities. You are well on your way in the family budgeting
process. You are doing it, every
step of the way. Consolidate and re-visit your budget often
it is a dynamic process and `living'
document or tools so to speak to help you keep your fingers
on the pulse of your financial
situation.
Another useful strategy is to set up a bill-paying plan and
process that will protect your interest.
When, how and how much you get paid will all influence your
course of action. Creative and
innovative allocation of your paycheck is the key.
If you get paid once a month, the amounts in your budget will
have to be paid monthly as is.
If you get paid twice a month, divide each budget item by
two.
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If paid bi-weekly (as is mostly the practice
these days), still divide the monthly amount by two
it will not be the exact amount to plan for, but a rough and
close estimate. In the end better than
nothing!
If you are paid weekly, divide each budget item into 4. Cash
flow management will form a big
part of your fiscal strategy, once you have put your budget
pen to paper and mapped out the
needs and requirements. Utilize your cash, checking and savings
account (if applicable) to pay
for expenses. Do not pay your bills with your credit card!
Keep track of all your discretionary spending. A financial
diary for a week is always a good idea
to scribble down in every time you withdraw money, pay for
something or open your purse
without thinking.
This will provide you with insights you did not have before
on where the money actually goes.
It will also carry within it, clues to adjust budget lines
if actual cost is higher on certain items.
Spending patterns and behaviors will emerge that might surprise
or shock you!
Having some wriggle-room and discretionary spending is always
motivation. The occasional
treat and indulgence, special night out or other family activity
is that more enjoyable, if you
know you have worked hard to earn it and deserve a pat on
the back for all your fiscal
responsibility and discipline!
Always keep one eye on the future folks... budgets might need
to change again and again for a
variety of reasons. You can never feel you have "arrived"
completely and that your budget is set
in stone. Family and life often throws us a curve ball or
two, banks, service providers,
government and fate sometimes do too!
Changing budgets should not be a source of frustration for
you; it actually shows you that your
family budgeting process is actually working. It is a real-time
pulse and mechanism to capture
these changes, which will leave you prepared and informed,
ready to act and respond
appropriately. This impetus for change can come from different
sources.
Here are some examples:
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Change of income, goals, rising prices, goals
reached, family growing, moving and or relocating
to a new place, family getting smaller, new spending habits,
change in lifestyle or unplanned
expenses.
If you can stick with it and see it through a family budget
can help you meet your goals, get and
stay out of debt, pay your bills on time, every time, keep
track of your spending, cut costs and
stretch your dollar to the max!
HINTS, TIPS, TOOLS AND TRICKS FOR SETTING UP A FAMILY BUDGET
"Creating a budget" captures in its expression and meaning,
both the excitement and the
apprehension most of us feel when we have to face our financial
situation and or lack of
planning and accountability in that area.
Most businesses would fail if they ran like we manage our
household incomes sometimes. This is
not a natural thing for people to want to do. It falls into
that `I will if I really have no choice'
kind of categories.
However, worth mentioning is that we spend most of our waking
hours at work, earning the cash
we need to get by and cover our living expenses. Then, we
do not take the time to plan what to
do with it. We just respond, spend and move on, spiraling,
circling around, aimlessly and
oblivious mostly about the state of our financial affairs.
This is obviously not true for some of us, for whom planning
and organizing comes naturally and
budgeting is like second nature and breathing, we just do
not think about it, get it done and then
barely spare it a second thought. Both these types of approaches
can hurt us in the long run.
Our society has also become so fast-paced and focused on success,
that we sometimes lose sight
of the future perspective, enjoying life and what we do have.
We cannot really focus on our own
financials for lots of "excuses", sorry reasons we provide
like: trouble slowing down, taking a
step back and evaluating our financial situations or not knowing
how to set up a family budget.
One of the first hints or tips we provide is advocating
fiscal awareness. This means
evaluating openly, freely and honestly where things are at
today for your finances and household.
26
The whole purpose and goal of creating or setting up a family
budget is to enlighten and alleviate
money pressures. Utilizing a tool that can assist you in getting
back onto the road to financial
freedom, fiscal responsibility and financial, budgetary health,
positive cash flow, with money to
spare would be the ideal work-tool to grasp and grab! As the
previous pages have shown the
process in itself is not altogether that difficult.
You can certainly see how this real-time, `dollar and expenditure
tracker' can assist you to be
agile and respond to market, family and monetary pressure,
changes and crises. Continue to
revise and update your budget as your needs, family and circumstances
change.
Money is such a daily necessity and ever-present in our comings
and goings. There is no
escaping it. It is everywhere and needed anywhere and all
over. We have different currencies,
structures, procedures and all around the world, but in the
end, it is the currency that makes the
world go round, fueling the global economy.
Seen from that perspective, we often feel that taking control
of our own finances and
expenditures will not have much of an impact, as we are all
at the mercy of the wheels and gear
of a churning economical machine, with government and banking
rules, regulations, trade and
principles, ethics and decision-making that affects our quality
of life. However, this is simply not
the case!
Good money management skills in the household is crucial,
not only for survival and good
financial state of affairs, it teaches our children how we
think handling money should be taken
care of. They watch us so closely.
We model certain behaviors, spending patterns, discipline
or maybe throwing all caution to the
wind with credit card spending, debt and reminder notices
all over the house, creditors calling,
afraid to walk to the mailbox to remove the bills, and more.
What chance do our children have to end up entangled in that
spiraling and vicious circle we
spoke about earlier? Money in, money out?
How do we get to the point where family budgeting is a learning
tool to help us teach our kids to
work better with their funds? Whether through allowances,
mutual savings goals, their own
27
account or more, as parents we have an opportunity
to instill some solid financial skills early on
in life that will assist them later, as they work toward their
independence and family budgets of
their own!
Do some of your own soul-searching before you start your budgeting
process. How motivated
are you to plan, set-up and stick to a family budget? Would
you do it now? Today? If you knew
how?
Then let us get started, together. There are lots of practical
suggestions for setting up a family or
household budget. We will never be able to cover them or the
mechanics and intricacies all here
at once. You will however continue to find in these pages
valuable insights and tit-bits to help
you pursue better fiscal management and cash flow, budgeting
in general.
It is all about making your dollar go further. Investing
in the time and effort that it will
take to get to that point of greater financial security
and possibly even have a surplus
eventually!
1: Take stock and face the facts head-on, honestly and with
serious commitment, drive and
purpose. Assessing your own capital worth and analyzing your
home life and situation from a
financial perspective is of utmost importance.
2: Plot your own course. Formulate some financial goals and
lay out your own roadmap on how
to get where you need and want to be financially speaking.
3: Take a thorough, critical and factual look at your fiscal
situation and status. Unbiased and
honest is best. Get a most recent credit report and look over
your bank and credit cards
statements, tax returns and other financial sources of information:
stock portfolio, RRSP's and
more.
28
Get a financial planner to assist you if you
are unsure about what to use and include or not in this
assessment. You might also want to take a broader perspective
and discuss retirement, priorities,
insurance needs, will and testament and more, because, like
financials, we never seem to take
these crucial life planning tasks and to do very seriously
and barely give them second thought or
time of day! The time is now and the place is here to take
control of your financial situation and
life.
4: Committing the time and effort to build your financial
action and spending plan, budget and
goals should get priority and might just be the most valuable
undertaking and time well spent,
not wasted you might ever set aside!
5: Think of how you define your own financial worth. Reflect
on what it is, what you base it on.
Is it concrete data and fact, perception or maybe even a wild
guess or estimate? Income, savings
and all of your other assets work together to give you the
whole fiscal picture.
This side of the balance sheet for most people remains fixed
and is relatively easy to do, when
they put their minds to it.
6: Always remember that this process and document known as
a family budget is only going to
be as good as the data and updates you provide! When acquiring
new assets, ensure that this side
of the balance sheet is strengthened appropriately!
7: Adjust your focus slightly to more in-depth and longer
term. We live so much in the moment,
especially if we purchase things or spend our money. We just
look at the cost today and do not
think of interest over time and this being the total cost
of course.
8: Actually setting financial goals will also energize you,
give you a reason to work towards
something meaningful. You might even start to enjoy uncovering
opportunities for frugal
choices, `penny-pinching' and what we prefer to call creative
savings techniques!
9: Become financially literate and master the family budget
process, tools and worksheets,
spending logs. Demystify some of the complexities and just
try some fiscal responsibilities,
without being overwhelmed by the intricacies of calculations
and more.
29
Remember, there is always professional help
out there, once you have gotten started, completed
the grunt and groundwork to move in and on to a comprehensive
consultation with a personal,
professional financial planner, who can explain the lay of
the land, impact of your situation and
plan in more detail.
Most of them will offer the first consultation free to assess
your situation for you. Most of them
utilize state-of-the-art software and technology industry-related
and customized tools that shed
light on even the darkest situation, to find a little ray
of hope and a couple of dollar at the end of
the tunnel. There is a way out of the abyss.
10: Family budgeting can be used to teach you good fiscal
habits: get in the habit of paying in
cash, using your credit cards only for emergencies.
Learn how to stop buying on impulse and use your willpower
to walk away, say no thank you
and leave it at that. Shop at wholesale and discount department
stores. Respect your budget
limits and stick to it. Buy generic medicine and support your
discount pharmacy.
Always try to find ways to supplement your income, part-time
jobs, your own business or rent a
room or floor in your house, offer storage, invest in real
estate and take in a boarder or tenant.
Turn your thermostat way down in your house and turn off a
few lights. Winterize your house
from top to bottom. Eliminate and treat areas where heat and
energy is lost. Cut back on home
and cell phone use. Check insurance policies shop around and
raise your deductible to lower
your monthly bill.
In isolation, these probably do not have a lot of impact individually,
but when they are
combining in a well-planned, cleverly executed family budget,
with discipline and consistency,
they will start to make a difference and you will start to
see the benefits and impact on your
bottom line.
11: A family budget is a learning tool and process to empower
individuals and families to better
self-manage their financial resources, spending, cost cutting
and household finances. In general
You will be able to set-up your own personal or family budget.
30
By tackling the skill and mastery of smart
budgeting, you will have a greater understanding
eventually of exactly where and by how much, you need to adjust
expenses to either live
within your means or know how much extra you need
to maintain your current lifestyle.
12: Other family budgeting process steps will require you
to be able to identify and categorize
all your expenses and, coupled with an easy to set-up and
follow filing system, create the
backdrop and framework for all future budgeting and fiscal
planning at home or elsewhere.
13: Family budgeting is not something that is taught by parents
or schools; however it is such a
simplistic concept, process and task that it is almost unthinkable
that we are not placing greater
focus on it these days.
In the end, it is all about what you DO, to make ends meet,
which implies action. To be in
charge of your finances; family budgeting gives you a sense
of real understanding and control
over your money, not the other way around. Money is a `tool'
and life necessity but it does not
prescribe how you should live or spend it.
14: Family budgets allow you to gain knowledge you would otherwise
not have had at your
fingertips, concerning your own and family finances.
For example: Knowing where and what expenses you can affect
or effectively change, to cut
costs appropriately, timely and immediately in certain cases
is very helpful.
15: To enable your family budgeting process set up an easy
and orderly log, record-keeping and
filing system; and make spending notes often to track your
money and habits. Trust me, we do
not know where all our money goes. We are just certain of
one thing and that it slips through out
fingers, hands and pockets, cards and plastic, fast!
16: Understanding, explaining and sharing the benefits of
good budgeting with others is pivotal,
to get them on-board and participating actively in the family
budgeting process. Ask for their
ideas and input. Two heads are better than one in most cases.
They might think of savings
opportunity, consolidations and or things to do without, that
you did not even think about or
considered for a second!
17: Here are some more family budgeting summary steps to remember:
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Identify and categorize all expenses look at categories
and line items, types and timing
of expenses, amounts and budget accordingly. Remember categories
like miscellaneous,
discretionary, maintenance, emergency and others. These will
also provide you with a
little more flexibility when you do have to massage your money,
budget and cash flow
processes to meet need, demands and change.
It is of utmost importance that we are able as family budgeters
to allocate and adjust
expense items, prioritize need with foresight, discretion,
informed choice and empowered
confidence, stemming from core and in-depth knowledge and
accurate information.
Practice utilizing a basic budgeting framework and recording
method in your family
budgeting and formulate your very own personal and or simple
`Home Budget' or rough
first draft of your financial situation a kind of YOU ARE
HERE situational analysis.
Chances are you will see and learn something you did not know
before.
Even if you feel you just have a basic understanding of budgeting
and how it can improve
your own management of your own and household finances will
make a difference. Take
the time out to explore and try putting your first one together,
following the steps given
earlier in this booklet.
This guide and its content, will appeal to almost anybody:
anyone who recognizes the need to budget;
those who have never or not yet learnt how to budget;
individuals or groups who are looking for a first-step debt-consolidation
strategy and
technique,
someone who has come into some money through a lottery, casino
win, gift or
inheritance and want to ensure they know how to budget properly
before they start
spending left, right and centre.
It is good for moms , dads, grandparents, children, friends
and families to do.
It fosters independence and fiscal responsibility, accountability
and stewardship.
Even those with reasonable income, now receiving less, will
find some answers here.
The one who needs to understand expenses that need to be adjusted;
and
even those who prefer to feel and be in control of their expenses.
32
Family budgeting enables them to be in the position to know
where they need to modify
their lifestyle and make significant adjustments to ensure
a bright and happy financial
future.
Some of the most important process elements and content pieces
of family budgeting to read
more about, study, learn and practice, hone and refine are:
A fundamental understanding of the principles, merits and
mechanics of budgeting and
the budgeting process itself. All the process steps to get
your through the journey and to
the resulting document, tool or magic numbers!
Distinguish between fixed, variable and discretional expenditure(s)
Identify and categorize all expenses, breaking them into categories
and line items, time-
frames, other detailed sub-classifications and clustering;
How to set-up housekeeping budgets and what to consider
Identifying hidden expenses
Identifying areas of discretionary spending, habits and perhaps
over-spending risk areas
Setting up expenditure recording systems
Decide on the best way suitable for you and your family to
monitor what you spend
Set-up a very basic Home/Personal Budget Filing System
Any calculations, formulas and budget principles you think
will help you maximize and
optimize your cash flow and money-management
Another great way to learn about family budgeting is to ask
around and to learn from others.
With the internet at our disposal, there are numerous reliable
sources of practical, tried, tested
and true tips, strategies and techniques to follow. We selected
but a few to provide a sample.
Never underestimate the power of a shared experience!
Sometimes exploring a financial activity like family budgeting
conceptually is not enough.
Getting a practical perspective, with some hands-on tips can
be more meaningful that a close
description or analysis.
There are lots of definitions, opinions and numerous books
have been written on the subject of
budgeting for families, by families and others. In our information-age,
knowledge is power these
days and lots of parents and professionals share and voice
their opinions openly on the internet,
33
sharing and growing the body of knowledge.
We selected a few examples to encourage others to
explore these at their leisure as well.
Here are ELEVEN more practical suggestions and tips from online
users posted on the internet
on family budgeting:
1. Keep a record book as well as your bankbook
It takes time and requires a lot of self-discipline. Start
each month with the balance and enter
every payment, etc in advance, in the form of a calendar.
It works well for most people due to the
fact that they always have their actual working balance handy.
Remember the comment about
having your financial information at your fingertips? Here
is a sure-fire way to get you on that
path quickly.
2. Calendar Calculations
Putting regular bills on a calendar based on due dates and
when salaries are received proves
helpful to some. This helps specifically to get everything
paid on time and keep in perspective
where the money actually goes, since all miscellaneous expenses
are also recorded.
3. Getting bills paid
Working out all the major and large bills (i.e., rent, car
payment, insurance, etc.), dividing it up
so every week, that amount is removed from the family `paycheck'.
Therefore, at the end of the
month, there is need or risk to lose an entire paycheck to
rent or car registration.
4. 1-2-3-4 Plan
Divide all bills weekly. A set amount goes to a savings account
each week. When there is a 5th
Friday in a month, you have a "free paycheck" to
save.
5. Open a household account
In a second checking account, deposit a sum that covers your
monthly expenses. Have all of your
bills automatically withdrawn. This account acts as a holding
cell for household obligations - the
primary account is for day-to-day operations. Works for me!
6. A timely budget
34
Get a notebook. List expenses and their due
dates. Divide payments into small amounts & use
labeled envelopes for payments and money storage. Reduce duplicate
credit usage to 1 or 2
credit cards. Use the net for bill paying and to check your
accounts.
7. Yearly savings
Making a list of all annual or once-a-year type bills (car
registration, shots for pets, school
pictures, etc.) and divide them by 12. Save this amount each
month and, when one of these items
come up, you have the money to pay it. No more surprises.
8. Save credit card receipts
Keep an envelope in the car for the credit cards you use.
When you buy anything using a card,
put the receipt in the envelope as soon as you enter the car.
Keep changing the envelope every
month. This will save you time and hassle when looking for
receipts.
9. Only twice a month
Separate all bills to be paid on either the 1st or 15th of
the month. This enables you to pay all
bills at once and on time. An added bonus is that you will
also immediately know how much
money you have left over for entertainment, vacation and other
discretionary items.
10. Split into Savings and Checking
Figure out a budget based on a savings account/checking account
split. Savings builds up for
things like real estate taxes, vacations, and insurance. Checking
is monthly (e.g. phone,
groceries, etc.). Split your monthly income into the savings
and checking accounts according to
the budget. Savings amounts are strictly budgeted. The checking
account is controlled by
watching the balance until the next payday.
11. Respect your partners need for financial security
Everyone likes to buy their toys, but the overall financial
security of the household needs to be
considered first. I am not against toys; just save up the
money first to buy them versus putting
non-essential day-to-day expenses on credit.
An example of a toy in my relationship was the spouse's need
to have a big expensive truck in
the driveway. I was not against the truck, I was against the
debt to purchase the truck when there
was no money in the savings or money built up for college
tuition. Be considerate of the overall
family financial situation and provide financial security
for your family.
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Moreover, on `living within a family budget', online users
listed FOURTEEN more great
practical suggestions on family budgeting:
1. Stay busy after work
One "easy" way to avoid overspending and thus stay
within your budget is to have something
else to do after work. Get a second job that is fun, go to
school, volunteer or get into great
physical shape. The more you do, the less you will spend!
2. Watch those miscellaneous categories
Make sure you have enough well-defined categories to capture
your true spending. Putting too
much into a miscellaneous category makes it harder to track
what you have spent and harder to
control, especially the splurges!
3. Need
If you did not know you need it, you probably do not. Do not
buy things just because they are on
sale. If you had no use or want for it before you saw it on
sale, then you will have no use for it
later.
4. Save money for special occasions on a budget
Add up how much you will spend on Christmas, birthdays, etc.
Treat that total like it was a debt
and make payments to a savings account for special occasions.
Be sure to select a specific day of
the month that your payment is due and stick with an amount.
5. Don't Forget to Budget for Special Occasions
When forecasting y | |
