Why learn how to make a househould budget? If you’ve been looking at the newspapers and stories on the Internet, you have probably heard that creating a budget is critical. It’s only by tracking our incoming and outgoing money that we can see our personal financial picture. We’ll know how much we spend every month and exactly who it goes to. We’ll be able to find places to cut our expenses and put that money toward savings, or an emergency fund, or debt.
If you have debt, especially on your credit cards, you will want to make sure you pay it off as soon as possible. Every dollar of debt you have is costing you money. Rather than putting that money to work for you, you are letting someone else build their wealth from it. Every penny of debt you pay off is like a raise for you. More money for you to use to your own advantage. If you have debt, put as much money as you can, every month, in to paying that debt off.
1. Start with the family. Get your family together and explain your finances. Explain that you are creating a budget and why. Explain about the need to live within your means. Maybe even talk about rewards for saving money, such as a family outing or vacation (paid with saved cash, of course).
2. biggest costs. Then, your next biggest. Continue down the list. Leave nothing out. Then, begin to look for ways to reduce the amount of money going out, from the top to the bottom. Every little bit, adds up. Hint: Look at what you are spending on food. There’s almost always room to expenses, try to make sure you get ALL of them. Stamps, vending machine visits, coffee, etc. The more you can list, the better you’ll be able to estimate your budget. Start tracking every expense, to the penny[spin], starting now. Over time, your list will be more complete.
4. Include an emergency [spin]account ,as well as, long term savings to your costs column. By assigning money to these two categories, every month, you will be planning for, and protecting, your future. For the emergency fund, your goal should be at least 6 to 10 months of expenses. After you hit that goal, you can reduce your donations to this fund.
5. Make sure to include expense categories for recurring, but not frequent items. Things like tires or dentist visits don’t happen very often, but they do happen. Setting aside funds in these categories will help keep you on track and away from items like your emergency fund!
Use this list as a starting point to learn how to make a househould budget. It’s not step by step, but these tips should help point you in the right direction. Every day you wait is another day where you have no control of your money, your savings, or your future. Do it for you. Do it for your family. Just do it.
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