How To Set Up A Monthly Family Budget

How to draw up a monthly family budget that works and stick to it.

If you don't have a budget for your family, chances are that you have been caught short of funds or are usually just left wondering, where did all the money go? Most of us think we can do just fine on our own, pay the bills when they are due and hope that there is enough money when we need to make a purchase. This type of spending usually leads to large credit card debt when unexpected expenses occur and there are no funds set aside to take care of them. More and more Americans are relying on their credit cards to take up the slack when they fall short of cash. With a sensible budget that is strictly adhered to, you can learn to manage your money and once you realize where your money is actually going to, you can learn how to cut out the unnecessaries and stop relying on credit cards to bail you out.

Use a spreadsheet program or money management software that often comes pre-installed on new computers to construct a permanent home for your new budget and don't forget to make entries and save your receipts to keep track of your actual spending. This way, you can look back on the months and see where you spent the most money and where you can afford to make cut backs. Many software programs will even remind you when it is time to pay bills and make suggestions for things like savings.

The first thing you need to do is to determine exactly how much income you have each month. Total all of your paychecks and income from other sources to get a baseline amount, which will be about the same each month.

First items to be budgeted out of your income are the fixed items which remain the same each month such as mortgage or rent, car payments, utility bills, loan payments, etc. Next, set aside reasonable amounts for other expenses such as groceries, clothing and entertainment. Try not to go over budget on miscellaneous expenses as even small amounts can add up quickly, leaving you short at the end of the month and whipping out your credit card again.

Once you have all of your bills accounted for, put aside a small amount for things that come up unexpectedly and then put as much as you possibly can aside for your savings account. If you have a specified amount to put away each month you will be on your way to saving more and if there is extra, throw that in on top of the amount you've planned for. When you've got your expenses budgeted, it is easier to see how important savings are and how you really can manage to save something if you are responsible with your spending.

The best way to crawl out of any debt you may have accumulated in your pre-budget days is to overpay your minimum payments as much as possible. A good rule to follow is to add whatever your interest fee is for the month to your minimum payment. This way you will be paying on top of your interest and your balance can actually go down instead of just being marginally affected by the minimum payment. Credit card companies don't want you to pay your bill quickly because they make more money from you if you just keep paying the minimum so the minimum payment is often too small to make much of a difference at all.

Above all, stick to your budget guns and be sure the whole family is aware of the plan. If you like, you can budget miscellaneous amounts for expenses to each member of the family so that when their allocated amount is gone, that's it for the month. This will quell impulse buying and help teach younger ones about finances and the value of money.

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