Sitting down with your spouse to put together a family budget may not sound like a wonderful way to spend the precious hours after the kids are asleep. However, taking the time to put together a realistic and workable budget will create happy moments for the entire family in the coming months. Follow these pointers to develop a family budget you’ll like and use.
Identify Your Monthly Income and Expenses
Take into account all paychecks and any other regular payments you receive, such as disability or social security checks. On the expense side, start by naming all necessary expenses, such as payments for rent/mortgage, car loans, education loans, utilities, childcare, groceries, gas and so forth. If any of those expenses vary, try to come up with an average that you can use in your budget. Next, list the “extras.” You may have to spend a few weeks jotting down every non-essential transaction to get an idea of what the extras are and how much you spend on them. Extras include restaurant expenses, entertainment expenses, extracurricular activity fees and costs associated with recreational activities. Finally, make note of any money you are already setting aside in savings or for retirement.
You can be as sophisticated as you want in tracking your expenses. Software packages such as Quicken give you advanced budgeting tools, and there are budgeting applications for smartphones. However, some people prefer the convenience of using a pencil and a small notebook that fits in their purse or pocket. Whichever method you use, be sure to track the expenses of the entire family, not just the spending of one person.
Convert to Cash
Instead of whipping out your plastic every time you hit the checkout line, reach for the cash. Studies have consistently shown that people spend less when paying with cash. You can even use cash, in a sense, when shopping online. Budgeting with the Reach Card means you have the convenience of a Visa card, but your spending is limited to the money you’ve put on it. You can load money by having your paycheck directly deposited onto the card or transferring money from your bank account to the card.
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Develop a Debt-Reduction Plan
One popular way to reduce debt is to tackle the smallest single debt first. Then, you take the money you were paying on the smallest debt and apply it to the next biggest debt, while continuing to make the payments you had been making all along. This strategy lets you see results quickly and get aggressive in paying off the money you owe. To get started, identify non-essential expenses you can reduce or eliminate and apply that toward paying off your smallest bill.
Your family’s budget is the master plan for keeping your finances secure. What has been the hardest part about sticking to a budget, and how have you addressed that challenge?