The idea of creating a family budget can be pretty scary. If you’re not good with numbers, you may consider this basic task to be a lot tougher than it really is. Really, though, the act of creating a budget doesn’t have to be horrible. By following a few simple steps, you can have a family budget that will serve you and your entire family very well.
Start by determining what your income is. For most people, this task is as easy as taking a look at your pay stub. Self-employed people however will need to work a little harder at estimating their income. Looking at the previous year’s tax return is a good place to start.
Now, you’ll need to decide how much you have to spend each month. Mortgage or rent payments, utilities (although these vary from month to month, you can estimate an average monthly amount), and debt payments will all need to be included in this figure. The idea is to work out exactly how much of your money is already committed each month. If you are afraid you’re going to forget something, try looking through your bank statements from the previous year.
Flexible spending should also be accounted for during the budget process. For instance, you know that you’re going to spend money at the grocery store each month. You should also include estimates for things like fuel for your car or clothing for you and the kids. Don’t be tempted to budget a bare bones amount that is unrealistic. Be honest and allocate funds accordingly.
Finally, don’t forget to set some savings expectations in your budget. You’re going to want to set up an emergency fund, as well as saving for big ticket purchases you plan to make later. Retirement and college savings plans should also factor into this part of your budget.
Hopefully, when you subtract all of the expenses and savings contributions you planned from your monthly income you haven’t exceeded your income. If you have, then you’ll need to go back and try to find some excess in your budget.
{ 1 trackback }
{ 0 comments… add one now }