Budgeting

Some people just dread the idea of creating a budget. Maybe they'd rather not know how dire their situation is, or maybe the idea of having to do math puts them off.

If you're among those that don't really want to have to create a budget, it's time to change your thinking. Budgeting is a great tool to evaluate your family's spending habits, and sometimes just knowing how much you're spending on "extras" can help you to think a little more carefully before you get out the credit card.

What is a Budget?

A budget is a simple tool that you can use to list your family's cash flow. How much money is coming in? How much is going out, and on what things? Do you have a plan for future expenses, like home maintenance, vacations, your children's education, or retirement?

That's all there is to it.

Building a Budget

To build a budget for your family, without stress, just following the following steps. Before you know it, you'll be on a path to spending intelligently, and seeing the benefits as well.

1. Collect three months of pay stubs, and use them to determine your average monthly take-home pay.

2. Using paper or online bank statements, credit card statements, and your memory, look at your monthly expenses (both fixed and variable). Use 3 months of records to get an average for each category, like utilities, groceries, mortgage payment, insurance, etc.

Don't forget to include debt payments on things like lines of credit or credit cards.

3. Analyze your results. Take note of areas where you feel you spend more than is necessary, and think of ways to economize.

4. Develop a monthly budget, and try to stick to it for 2-3 months.

5. Make sure in your monthly budget, you set aside money for savings. If you don't already have one, set up a savings account to make regular deposits to.

6. After 2-3 months, revisit the monthly budget. Fine-tune any areas that you need to, update required debt payments, etc. Remember that an effective family budget is a living document.

7. If you can, consider using a budgeting software program, or a spreadsheet application to make it easier to keep a record of your spending. Or, if you prefer, try using the envelope or jar method, to limit your spending only to the amounts budgeted.

Just by using these 7 simple steps, you can develop a no-hassle budget for your family that can help you to build savings, and lead to a financially stable and secure future for you and your family.