For some folks, the idea of a budget is often very profound. This can be attributed to a number of different realities, but one underlying reason is the frustration in acknowledging the difficulty involved in doing a budget, realizing that with one wrong purchase, you can actually ruin the entire enterprise. With this realization comes the perennial headache that most homemakers must deal with.
However, the thought of creating a budget for your household should not create a daunting or dreaded feeling, because making a budget is not an impossible task when put in the right context. On the contrary, a budget can actually be a great way to keep track of the family expenditures and help you evaluate things that you spend the lion’s share of the family income on.
So, what is a budget? Simply put, a budget is a tool for handling your finances by controlling the family expenditures in a way that available cash resources is enough for paying bills, while still ensuring that savings are set aside for future expenses; e.g. vacations, education for children, or even for retirement.
Try these simple steps in preparing a no simplified family budget, and see the benefits of smart spending:
1. Gather three months of your pay stubs. With these income figures you can get your average monthly earnings.
2. Get out three months of your monthly bills. Do this for the fixed expenses like the rent, phone bill, car payments and other loans that come monthly. Add them up and get the average. Do the same for other expenses like groceries, and credit card bills.
3. Evaluate the results of your calculations. Looking at your average monthly income against your monthly fixed expenses and other monthly expenses, think of some ways to economize. Cut back on some items that can be put in the “unnecessary” column.
4. You now have a written record of your income and expenses. With these numbers and hard facts, develop a family budget and try to stick to this monthly budget.
5. Now that you have a monthly budget, set up a savings account. Establish a habit of saving by by routinely making regular deposits to this account.
6. Keep track of this monthly family budget just to see if it is working for you. Try to fine-tune the “rough edges” of this budget as you go along by adjusting the numbers when necessary, add and subtract, but never alter the ratio of income to expense or the saving routine.
7. Try to get hold of personal budgeting software. With budgeting software or a spreadsheet application to keep record of your budget, it will make organizing your expenses that much easier.
These are the basic steps in developing and implementing a simplified budget, including savings which can be achieved and easily adhered to by the entire family. Of course each family has diverse needs and wants. But you have the freedom to develop your own simplified and achievable budget, depending on your family’s financial background and needs. No matter how you do it, just focus on the end result, which is building a savings that leads to a bright and financially stable future for your family.