How To Set Up a Family or Household Budget

Managing money isn't always easy...especially when it doesn't always seem like there's enough money to go around. Bills, rent or mortgage payments, living expenses, and the rising cost of gasoline can all make your money appear to vanish before you've even had a chance to count it; you're then left holding the bag when your children or even your spouse comes to you seeking a few dollars to help them get by.

This is where creating a household budget can be a lifesaver. By creating a budget, you can better see where your money is going...and where it needs to go. Your budget won't make you suddenly have more money, but if used properly it can help you to limit unnecessary expenses and to let you know exactly how much you can afford to spend on non-essential items. If done correctly, a family budget can even help you to set up savings for the future and establish habits in your children that can assist them in saving money later in life.

When creating a family or household budget, you should do the following:

1. Collect your monthly bills, as well as pay stubs and any other receipts that track regular income or expenses.

2. Begin adding up your various bills and expenses, making notes as to whether the examples that you're figuring in are high, low, or about average for that particular bill or expense. Allocating a little extra for your regular expenses can help to make sure that everything gets paid, even when one or two bills are a bit higher than usual.
3. Calculate the approximate amount that you spend on food and other essential products for the home. As before, adding a little extra to this amount can help to make sure that you don't have to do without.
4. Start figuring out how much you tend to pay for gasoline and other fuel or transportation expenses each month. Be sure to keep in mind the changes in fuel costs in the past few years.
5. Determine how much you generally spend on other expenses, including entertainment and non-essential services.
6. Once you've compiled all of this information, begin adding up pay stubs and income receipts for all contributing members of your family or household in order to determine about how much money you have coming in each month.
7. Compare the total income to the total expenses. If your household expenses are higher than household income, start looking at options for reducing certain expenses. The more you can lower individual expenses, the more you'll be able to use the saved money elsewhere.
8. If you have more income than you do expenses, create allocations for savings or incidental funds in your budget. This can help prevent impulse spending while creating a funding buffer for your household.
9. Once you've figured out the various aspects of the budget, either make a physical copy of the budget on paper or by using budgeting software on your computer. (If you use budgeting software, deciding to use it from the beginning can assist you in making calculations, as well as offering suggestions of things that you might want to add to your budget.) You should also be sure to post a copy or printout of your family budget somewhere that all of the family can see it... if you feel industrious, you might even use a markerboard so that changes can be made on the fly and comments can be added by different family members.