Budgeting for yourself if challenging enough–but it’s even more difficult when you factor in a spouse and children. And of course you want to help your kids pay for college one day! Creating a family budget can pave the way for financial success. It’s important to plan your expenses each month so you can save money for the future. Here are some tips for creating a budget to fit in with your household income:
Gather All Financial Statements
Before you start making your budget, you should gather all of your financial documents like receipts, bills and bank statements. This will help you get a sense of all your expenses as well as your income. Start plotting when each bill is due so you have an overall idea of when everything needs to be paid.
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Categorize Expenses
Break down your budget into categories so you can know of where your money is going. Start with fixed expenditures like rent and utilities. These are items you have to pay every month no matter what. There are other expenses that aren’t fixed but are necessary like groceries, transportation and medical bills.
When it comes to credit card and student loan debt, make sure you are paying enough each month that you are reducing the amount you owe, rather than just paying the interest. Next, move on to your discretionary expenses like entertainment and clothing purchases.
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Compute Your Discretionary Funds
A big part of the family budget planning process is determining what discretionary funds you have to spare. You want to give yourself a limit so you don’t go over and eat away at your savings.
It’s best to give yourself a flexible range for your discretionary family budget. For example, you may want to have a smaller spending limit in the beginning of the year to save money for a family vacation in the summer, school supplies in the fall or Christmas presents in December.
