Setting up a household budget enables people to have greater control over their personal finances and to get better usage of their hard-earned income. If the budget is carefully maintained, it will also help provide more money each month because of better money management. Here are some tips about how to set up an easy budget to manage money more efficiently.
Start Budget by Determining Average Monthly Bills
The total of all monthly bills needs to be calculated first. Because this figure probably changes for most people, one way to do this is to look at a minimum of five or six monthly bank statements and determine what is an average cost per month. If there is more than one bank, it will be necessary to look at the statements from each in order to get an accurate figure.
Look Over the Cash Flow for Budget Worksheet
Find out where all the cash goes to each week to be able to add it to the budget worksheet. This may take a little time to think about, but include all money spent on things like coffee and snacks, meals eaten out, sodas or other soft drinks, magazines, cigarettes, gas or bus money, etc. If there are no receipts, then it will be necessary to do so for about a month in order to see where it is all going.
Watching where the cash is going each week could be a real eye opener. For one thing, if there is no careful record of where the money goes prior to this time, then it will probably be surprising to see just how much is going toward trivial things.
Set Up the Various Categories of the Budget Planner
Set up a sheet of paper, or spreadsheet, where the financial budget records are going to be kept. This is probably easiest to do by writing down the categories of expenditures on the left of the chart, and then write down the month or months across the top of the sheet.
Determine the best way to categorize all expenditures. These can be listed as a single item, such as "Utilities," or have separate lines for each utility and record them that way.
Figure Out the Total Family Income for Family Budget
Calculate all income that comes into the home. This should include the salaries of both spouses, any rental income, investment income, alimony, child support, social security, etc. If self-employed, or receiving an irregular income, then take an average over at least a six-month period.
Calculate an Amount for Each Budget Category
After knowing how much money comes into the house, be sure to divide up the income into the various categories. For instance, allot enough money to the category "Utilities" each month, and the amount given should cover all of them. Assign amounts to the fixed portions of the bills first, then assign appropriate amounts from the balance of the remaining income to non-fixed expenses such as food, gas, clothing, etc.
Review Budget Expenses and Add in Good Features
Be sure to add into the budget some important things, such as savings, which should be at least ten percent of the income. Emergency money also needs to be added some where, as well as some fun money each month. By carefully reviewing each monthly expense, it may be decided that some things just are not that important and more money could be diverted toward more important things like to a church, to saving money, or to a charity.
Another way to create a budget, however, is to use budget software. It is also possible to find downloadable sheets for use with Excel, that are easily convertible to fit the needs of the family.
Resources:
- Creating a Family Budget to Become Debt Free
- Five Powerful Steps to Get Out of Debt
- Six Powerful Money Saving Strategies
- 7 Great Ways to Reduce Bills and Save Money
- How to Save Money on Home Heating Costs This Winter
TLE101
Mike Valles - Mike Valles has been a full-time freelance writer for more than six years. He has written thousands of articles and other materials - ...
