A family budget is essential in making sure we spend our money wisely. After all, we work hard to earn a living. It’s good to see what money we have coming in and what’s going out.
Did you ever think about what is happening with your money when you are not tracking income and expenses? Did you ever spend more in a month than you earned? Have you attempted to limit your spending on things like eating out, going to the movies, or new clothes?
Overspending can get us into some serious financial trouble. A budget gives you more control over where you really spend your hard earned cash. Wouldn’t it be nice to have an actual choice with your money?
In short, a budget tracks your money. You record your income (the money you earn/receive each month) and your record your expenses (the money you spend each month).
Your income should include any funds you expect to receive on a regular basis. This could include your paycheck, rental income, child support, or other funds.
Your expenses should include everything you spend money on. Start with your monthly bills such as your mortgage/rent, car payments, utility bills, and childcare expenses. Next, figure out how much you need each month for groceries and other essentials.
Your discretional income is the money left over after you subtract your expenses from your income. This will pay for entertainment, clothes, getting your hair done, etc.
Having all your information in front of you helps you identify where you may be wasting your money. Saving money can be difficult to do without a budget. Even with the best intentions, sometimes there is nothing remaining at the end of the month.
A budget gives you a chance to be a bit more proactive. Every month you should prioritize saving. Set aside some money each month. Pick an amount you are comfortable with, even if it’s just $20.00. Consider your savings to be a regular expense just like your utility bill payments. It won’t take long to get into the habit of setting money aside for savings.
You may want to consider opening a separate savings account so that you are not tempted to spend the money. Talk to your banker about your best options as you should be able to earn at least a little interest. Keep in mind that many savings accounts limit how often you can withdraw funds.
You can set up an auto-deposit to have your savings transferred to the new account as soon as your paycheck comes in each month. If you don’t see it, you’ll never miss it!
A budget really allows you to consider how you want to spend your money. Do you want to splurge on dinner and a movie tonight? Do you want to spend $150.00 a month on Cable TV or go with an online streaming service for less?
Make sure to reevaluate your expenses frequently. Your priorities or needs may change. Do you want to continue paying for a yearly subscription to a service you no longer need? Are you paying extra for cell phone minutes that you are not using? Do you have a subscription to a magazine you no longer read?
Don’t forget to audit your budget often as well. Can you increase the amount you are setting aside as savings? Did you receive extra money (birthday cash, tax return, bonuses, etc.) that you can put straight into the savings account? Again, you won’t even miss the money, but it will help you build up your savings quickly.
Your financial well-being will benefit from a family budget. Your budget helps you make sure you’re not spending more than you’re making, and it gives you the freedom to make choices with your money.