Family Budgeting Basics
Have you been talking about setting up a family budget but are unsure where to actually start your family budgeting?
Sometimes it’s good to just start with the basics, like to outline the budgeting categories you want to include for your family.
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Every family is different and will have different expenses, however, there are some core things to consider when developing your budget.
Here are some tips to help you formulate a simple and easy to follow, family budget.
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What you really need to know to get started
So let’s break down the different categories that you should consider including in your budget.
The first place to start when outlining your budget is your income. There might be some estimation or fluctuation here, but make sure you are being realistic here as the rest of your budget depends on your income.
A good way to do this is to take your net income from the last three months, add it together and divide it by three. This will give you your monthly average income. If your income remains pretty consistent each month, this should be pretty easy to figure out and be pretty accurate.
Your next category to dive into is your expenses. It’s a good idea to include enough detail that you have a clear grasp of things.
Don’t worry about splitting your expenses into dozens of different categories, this will only frustrate you and you will likely give up on your budget before you have even started. Try and make your categories pretty general. For example, “entertainment,” can include things like going to the movies, going out to dinner, taking the kids to a museum, etc. rather than listing all these things in separate categories.
As you break down your expenses into understandable categories and numbers, remember to include things you might not otherwise think o put into your budget. This could include annual expenses, charitable giving, a new saving, and the like.
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Tracking your actual expenses is where people tend to get a real wake up call.
Estimating your expenses gives way to “real” numbers when you write down your actual expenses during the month. This is the last section of your budget plan. Keep a running tally of what you are actually spending on things over a couple weeks.
It might be beneficial to invest in a budget tracking notebook:
Some basic principles
When you are establishing a budget there are some basic principles that you should adhere to.
Distinguish between your needs and wants.
This can be hard for many, but it is vital to creating and sticking to a properly functioning budget. Beware of convincing yourself that a want is a need when it is not. You may just be trying to find an excuse to buy something or spend money where you actually could be saving.
Real needs are things like rent or mortgage, food, gas or public transportation, or clothing. But again, things like clothing, you should be able to distinguish between needs and wants there as well. You might NEED a new winter coat, but does it really have to be the latest designer? No!
Your expenses should not exceed your income. If it does, there is a problem! You may find yourself surprised the first time you do a budget and discover that you actually don’t make enough money to cover your expenses. If you discover this, you need to take a careful look at our income section and see where you can increase it, and look at your expenses just as carefully and see where you can make some cuts.
Have you started your budget yet?
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