creating a family budget

Tips for Setting up a Family Budget

Most people, young and old, have trouble saving money and getting ahead. This is due to plenty of factors such as a bad economy and wages that are not keeping up with inflation. With that in mind, most consumers opt to try and save by setting up a budget as it enables a person to plan for the future without any serious surprises.

If you’ve been wanting to develop a workable household budget, this guide is just for you!

Keep it simple

When starting out with a budget, some people give in to the temptation and build a serious long-term plan including every financial detail, past and present. While this is certainly the end goal of some, just start by keeping it simple. With an Excel sheet or piece of paper, you can get started and write out a serious and workable plan. Ideally, when creating the budget, you would first draw a picture of your current financial status; with this, you can easily understand where you need to go.

Use templates to get started

Here are a few templates we found on Reddit that you may want to check out in order to get yourself started:

When you start, first note all of your expenses and income. Expenses should include housing payments, insurance, utilities, car costs and monthly loan payments. Income should include anything from a full or part-time job; also, when listing income, be sure to note any business, alimony, child support, investments or 1099 income from side work. With this full picture, you can begin to understand how to approach the budgeting situation.

Separate out your cost types

While it is important to keep it simple with expenses, you should opt to separate the discretionary spending from the necessary monthly bills such as rent and car payments. Ideally, try to go three months noting your costs and then create the full budget. This allows you to understand where you overspend. For example, often, people go out to restaurants too often, buy unnecessary items at the grocery store or buy a lot of alcohol. Either way, when separating discretionary spending from necessary monthly bills, you will know where you must cut spending to adhere to the planned budget. Without a doubt, when meeting goals, most people do so because they separate costs and understand what is a necessity and what is a luxury!

Goals

After creating a budget, you should write a list of goals for both the short and long run. For example, when looking to near future, you should think about paying off a credit card bill or saving money for an emergency fund. On the other hand, when listing long-term goals, you will usually think about your retirement and paying off the mortgage. With goals in mind, you are less likely to falter as you will have something to plan for and strive to achieve.

Remember, while this goal setting process is sometimes painful and often a time-consuming process, it’s necessary to complete so you will know you are properly planning for the future.

Stay tuned to further posts on this topic!

Get started

With clearly defined goals you can now quickly get started. Whether the goals are to pay down debt or save money for school, you should start immediately after you have the goals defined. At the same time, when sticking to a budget for a few months, you should begin to revisit goals, analyze your spending and determine where you can save money or put income or savings to better use. Remember, it is pertinent to reevaluate your budget situation occasionally as times and your situation can change rapidly.

When creating a budget, you can go a long way in securing his or her financial future. At first, you may struggle as you fine tune your budget, clarify your goals and develop the discipline to stick with the program. However, with this quick guide, hopefully you can start and get back on track fast!

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