It is easy to lose track of where your money goes every month, leaving you perplexed as to why you never seem to get ahead. Sometimes, the simple act of making a family budget will help you to get a clear idea of what you are spending, as well as aid in establishing goals.
First of all, you will need to determine exactly what funds you have available to work with every month. This can include salaries from all members of the household, as well as extra money that come in throughout the course of a year, such as bonuses, overtime, interest earned on investments, or even money your children receive for birthdays and Christmas. An overall family budget can be broken down even further to include individual members and what they may want to spend their disposable income on. If you can project exactly what that income will be and where it comes from, you will be more likely to watch where it disappears to as well.
After determining what your sources and amounts of income are, write down all your expenses that occur monthly. This will include rent or mortgage expenses, food, transportation, debts, education costs, utilities and more. Anything that is a recurring expense needs to be in writing. In addition, allot a certain amount of money in the monthly budget to put aside for recurring costs that happen every few months, such as clothing, school expenses, membership dues, property taxes and holiday spending. Add up those expenses separately and then divide them by 12, putting the funds aside on a monthly basis so they will be available when needed.
As you spend funds on necessary items, recurring commitments and debts, write down everything that you spend money on. This will also include anything you splurge on, such as going to the movies, out to dinner, a new piece of jewelry, sporting equipment or anything that comes up. The intent is not to discourage you from enjoying life, but rather to make you aware of what you do spend on, so that you can ascertain if it is in fact what you want to be doing. Sometimes, seeing it in writing will make you reconsider. For example, if you find that you are spending $200 a month, on average, dining out in restaurants, you may want to choose something else to spend that money on, such as a new piece of furniture or a pair of nice running shoes. You may find that you can actually afford more once your budget reveals excess financial waste in a particular area.
Make goals for where you want your finances to be, including savings accounts for future college expenses, retirement or vacations. If you have a secret desire to start your own business someday, or to add an extra room onto the house, here is where setting a goal can help you reach it. Look at your budget and make sure that your goals are realistic – then start working toward making it happen.
Once you get a realistic picture of what your expenses are and what goals you want to work toward, make a budget that fits the overall circumstances and then stick to it. It may seem restrictive at times, but it will create more freedom as you adjust to it and tweak it to fit your lifestyle.
Take some of the ideas here to get started on the pathway to financial stability and reap the rewards of careful planning. Take control of your life now with these easy steps.