Financial health is just as important as keeping your body, mind and spirit healthy. All you have to do is keep your expenses lower than the money you have coming in monthly. It sounds easy, and in fact it is easy if you can set up some basic guidelines to adhere to. “How am I supposed to do that?” you are asking yourself. By creating a Family Budget that’s how!
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First Things First – Make a Family Budget
Your budget is not always going to be exact, but it gives you a benchmark of what you can expect. This will be a living, breathing document because life happens. Sometimes unexpected expenses come up, or you may have a great sales month and make more money than expected. Either way, if you have a starting point, you will be better able to gauge your success, or setback if you have a budget set in place. Also, come up with some reasons that you want to create a budget. It’s good to have motivation to know why you are doing what you are doing.
Reasons For Making a Family Budget
There are several reasons that we needed to get our finances back on track.
1. Pay off our credit card debt
2. Pay off medical bills
3. Save money for a new SUV or Van
4. Keep setting aside money for college for the kids
5. Save money to do some home updates & renovations
6. Pay off our mortgage sooner
7. Save money to buy more investment properties
8. Grow our savings account so we have a larger safety net
What are some reasons that you want to get a Family Budget established for your home? Are some of them the same as ours? Here are a few other reasons some of our readers have suggested.
1. Pay off student loans
2. Get out of debt
3. Save up money for a vacation
4. Buy new furniture & appliances
5. Pay off vehicle
Make a List of All Money Coming In
You want to list all the money that you earn. This includes any salaries, commissions, rental income, child support, social security benefits, etc.. basically any money that you can deposit into your bank account. Start by listing any and everything you can think of. Just like it will be important to list your debts, it is also important to list your money coming in. The more accurate you are, the better idea you will have of your financial health.
Make a List of All Expenses
Sit down and tally up all of the expenses that you have. It’s important that you write everything down! Go through your receipts, bank statements, credit card statements and any other unpaid bills to get an accurate tally. The more precise that you are the better. It may even help to keep a spending journal or calendar with you so that you get the full picture of all money that is being spent.
Don’t Forget Periodic or Annual Expenses
Periodic expenses such as insurance payments and dental visits can be easy to forget and leave off the list since they only come around annually or bi-annually. Don’t leave yourself scrambling to cover these expenses. Allocate a portion of each paycheck towards your “Annual Expenses Fund” that way you have it covered when the time rolls around.
Categorize Expenses
Once you have everything written down, start organizing them into categories. The 3 basic categories that you will be able to start putting your expenses into are Fixed Expenses, Variable Expenses & Periodic Expenses. Some examples of expenses that are fixed expenses are mortgage payments, car payments, life insurance premiums.
Other expenses, like entertainment expenses, travel expenses, groceries, are Variable Expenses. While things like Dental Cleaning Payments, Home Maintenance and Auto Insurance Premiums are Periodic Expenses.
Prioritize Expenses
After you have put all of your expenses into categories start prioritizing them. There are almost always expenses that are just completely ridiculous that you can completely cut out.
Embarrassing But True:
When my husband and I finally sat down and went through all of our yearly expenses one year, we tallied up over $2700 spent at Dunkin Donuts! Being Real Estate Agents, it had just become part of our routine to swing through the drive through after dropping the kids off to school. We would each get a cup of coffee and a sandwich then start our day. It sounds crazy to me when I think back on it! What are some things you spend money on that you can scale back?
“Once you realize you have a problem, you can take the steps necessary to remedy the situation.”
Having a budget is such a great tool for financial stability because it gives you a benchmark. You can do a tally every week or every month to see where you are doing a good job saving and also where there are opportunities to reign in your spending. If you don’t measure what you are doing, it is difficult to tell if what you are doing is working or not.
If what you are earning isn’t enough to cover the bills that you have, some drastic changes need to happen. Either you need to really adjust your spending, or you need to earn more money. If you want to learn how I started a blog as a side hustle to earn extra money, click here to read my post on
How To Start Your Own Blog in 2019
What are some ways that you make extra money on the side? I would love to hear your ideas! Leave me a comment below.
Set Realistic Goals
Give yourself a timeline of when you want to achieve your objectives, but try to be realistic. This will take time. It doesn’t happen overnight. If you owe 100,000 on your mortgage for example, setting a goal of paying it off in a year is not realistic if you only earn $50,000 per year. (Unless one of your objectives is to earn a significant amount more per year) You get my drift.
So lets say you owe $500 on a credit card. Set a budget for yourself on how much you can afford per month to get that card paid off. Maybe give yourself 3-5 months to get it paid off. If you give yourself a timeline, it is easier to see how much progress you are making towards achieving your goal!
In Conclusion
While going through our expenses was painful and uncomfortable, it forced us to really be honest with how irresponsible our spending habits had become. With the daily craziness that was our life, work, kids, church, school, sports, marriage, house duties, family, endless activities and obligations, we had traded responsibility for convenience. We gave freely and recklessly of both our time, energy, effort and money.
The road we were going down was a road to disaster and burn out. It was time to slow things down!
We were spending money as quickly as it came in because we were not being conservative or responsible with our spending. Instead of meal prepping, we were eating out more often or ordering more take out dinners.
For my husband and I, making a Family Budget was absolutely essential in getting our life organized and back on track! With time and effort you can do it too! I’d love to know some of the things that have held you back from putting a budget together? Leave me a comment below and let me know.
Please note that I am not a certified financial advisor and the information shared on my site is from my own personal experiences. It is important that you consult with the proper legal, tax or financial professional to assist you with your particular financial situation.
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