Budgeting

Recent economic circumstances can teach us a thing or two about the importance of being on a family budget. We take a look at some family budgeting basics.

Some people don't budget because they don't realize the purpose of family budgeting. The best reason to be on a family budget is to keep track of your family's income and expenses. It's much easier to see what's coming in and going out when you put it in a family budget plan, rather than keep track of it in your mind. Budgeting helps ensure you're not overspending and that you're making the best use of the money that comes into your home. If there are spending leaks, creating a budget can help you figure out where the money is going. Budgeting also helps you plan for major financial goals like vacation and holiday spending.To start creating your household budget, add up all your income for the month. Multiply weekly pay by 4 and bi-weekly pay by 2 to come up with the monthly income. Include any alimony or child support you receive. Include dependable sources of income only. That way you're not basing your budget on money you might not receive.

Total the household expenses. Write down all the things your family spends money on each month. Then, list the amount you spend on those things. Expenses go beyond utilities and other bills. Your family budget should include other types of spending like groceries, transportation, entertainment, etc. Remember, to write down all the things your household spends money on to get a complete picture of how your family is spending money. The small amounts of money you spend when you order checks or buy something out of a vending machine may seem insignificant at first, but they can add up over time.

Don't forget to income irregular and variable expenses. These are those expenses that aren't due every month, like insurance premiums and property taxes. You should continue to include these things in your monthly budget and set aside the money for expense so when it's time to

pay, you don't have to break the bank to cover it. If it's a semi-annual expense (due every 6 months), divide the total amount due by 6 and write that into your monthly budget. Or, if it's an annual expense divide by 12.

Bring your net income to $0. Your net income is the total of your expenses subtracted from your income. If net income is a negative number, then your expenses exceed your income. You should cut your spending in some areas to keep from overextending your family budget. On the other hand, if net income is a positive number, you should put the extra in savings or use it to pay off debt or both. Once you have a zero net income, you know all your family's money is accounted for.

Don't forget to save. An important part of your family's budget is putting money aside for the future. Not only should you save and establish an emergency fund, you should also save for retirement, college tuition, and even the annual family vacation. You're more likely to contribute to savings if you include it in your family budget planning, rather than not.

Track your spending. At the end of each month, review your spending to see if you followed your budget. If you went over in some areas, make sure you included enough money in your budget for that area. Otherwise, be more cautious next month to make sure you don't overspend in that area. The trouble with overspending your budget is that you may not have enough money to meet all your financial obligations. If you notice that you've overspent in one area, you'll need to cut back in another area to keep from spending too much.

It's OK if your family budget changes. In fact, your budget should change, especially as your family changes. Updating your budget helps make sure you continue to make the best use of the household's income by planning appropriately for your future expenses.