Some families breeze through month by month minus any kind of financial planning. It is important to keep track of family expenses and income, and thus having a family budget worked out has its benefits. It always makes financial matters much easier if you have an idea of how much money is being earned and spent per month. Having a budget set down also keeps tabs on expenditure, ensuring that you do not overspend. A family budget is also great to have, especially when planning a family vacation.
Here is how you can put together your family budget:
1. Calculate the total income per month. If you receive any child support or alimony, include that as well. Remember to only include income that you are sure you get every month. Otherwise you will end up basing your budget on money you will never get.
2. Next, add up the total household expenses. You need to take into account items such as utilities and any other bills you pay monthly. Transportation, groceries, entertainment, fuel, etc should all be added to this list.
3. Variable and irregular expenses – these are expenses you do not have to pay monthly, but it would help if you include them in your budget and set aside that money. This way, when you have to pay it, it does not feel like you suddenly lose a whole chunk of money. If it is an annual payment, then divide it by 12 and so on.
4. Net income – the best possible scenario is to have your net income at 0. This is the figure you get when you subtract your expenses from your income. If you get a negative number, then, it means that you have overspent, and would need to cut down on some items. If you get a positive number, then all is well and good. You should consider putting the extra money into your savings.
5. Savings – it is very important that you make it a point to save. You will need to save for college funds, retirements, vacations, etc. A good idea is to include savings under your family budget. This way, you make sure you save every month.
6. Keeping track – it is important to review your spending patterns every month. Check if you have kept to the limits in the budget. Remember, if you do happen to overspend, this would mean that you are unable to meet all your financial obligations, and might have to cut back on something else.