Where did the money go? Did we go over the family budget this month? Those are questions that lots of parents and families ask themselves.
The easiest way to get the answer: don't just create a family budget - stick to it and track it. It's just not the answer that most people want to hear. For some, you might as well be strapping the handcuffs on them. A household budget process can be a pain at the outset, but once it is in place, it is easier to maintain and helps you know where the money goes.
A household budget needs to list all the money coming into the house on a monthly basis. This includes paychecks from work, child support, alimony, income from real estate investments, and pensions. These are sources that total your monthly income that can be used to pay household expenses.
Add the income list up and to get a total for the month. This is the total you have to start with. Does it look like alot of money? It can be hard to believe when you add it all up how much is coming in. Or, it can not look like much at all. But how much comes in is really more important when you compare it to how much is going out.
Next on the list is what you pay each month for the stuff that doesn't really change - the recurring bills. These are the payments that are largely the same each month - and that aren't easily changed. This includes the home mortgage, utility bills, other loan payments, child support, alimony, credit card payments, child care, entertainment bills, car insurance, and car payments. This can also include regular savings ontributions whether to a money market or to a 401k account. These are the easier expenses to budget for.
Now look at the family spending on things that change from month to month. This expense group includes clothing, food, gas, medical co-pays, and entertainment. This entertainment includes going to the movies, a play, or out to dinner. Monthly cable television bills would go in with the recurring bills.
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Add up all of the expenses for the two large family spending categories and subtract that from your income. What is left is what you can save, invest or spend on things you want or need. People who send money to their savings account each month can record that amount as an expense. If you are having trouble saving, this is the perfect time to allocate an amount for that purpose.
Keep a log such as a check register, or use other budget tools, in tracking where the money goes. Try writing down everything (yes, every dollar) that is part of the family spending for one month. That includes writing down what ATM withdraws get spent on. ATMS are easy, convenient, and a great way to ruin your family budget efforts.
Creating a household budget is a family affair. Parents dont need to do it alone. Have everyone in the house contribute to the final family spending plan - thinking of budget categories or figuring out if online tools are a good option. After all, everyone will be affected by it in some way. Kids can benefit from the financial habits that they see you implement in your daily life.
Budgets are not quick fixes. Like any other money management habit it will take time to become second nature. Plus, it will take time and practice to find a household budget and budget tools that work best for you. Keep at it, though, and you will learn alot about your family spending and your family budget.