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Making a Family Budget


Your family budget determines how much money your family will:

    Spend for specific types of purchases, such as clothing, food and entertainment.
    Put into savings for long-term and short-term goals and for emergencies.
How will budgeting benefit you?

    It keeps you in control of your spending, instead of letting your spending control your life.
    It helps you to manage your money wisely. Planning helps your family reach their goals and enjoy greater financial security.
 Five Easy Steps to making a family budget:

Step 1
Identify your family's needs and goals

Step 2
Identify your financial health

Step 3
Income and Expenses

Step 4
Set up your budget

Step 5
Tips to make your budget work

Identify your family's needs and goals

Step 1

Make a list of your family's immediate needs.
These are things that your family can't do without.

Examples:

  • Food
  • Clothing
  • Housing
  • Utilities
  • Health Care
  • Transportation


    • Make a list of your family's short-term goals.
    These are things that you want for the near future.

    Examples:

  • More Education
  • Home Repairs
  • Emergency Fund


    • Make a list of your family's long-term goals.
    These are things that you want for the distant future.

    Examples:

  • Retirement Fund
  • College Fund for children
  • Remodeling the house
    •

    Identify your financial health

    Step 2

    What is your family's general financial health?

    Add up your total assets.
    This is the current value of everything your family owns.

    Examples:

  • Cash on hand
  • Money in bank accounts
  • Cars
  • Property
  • Furniture and Appliances


    • Add up your total debt.
    This is the total amount of money you owe.

    Examples:

  • Credit card debt
  • Loans
  • Unpaid Bills


    • Now compare your assets to your debt.

    Assets > Debt - Congratulations! Your family has a good start towards financial health.

    Assets < Debt - You will need to work out a plan to pay your debt steadily. You might contact those you owe money and work out a realistic payment schedule.

    Income and Expenses

    Step 3

    What is your income and expenses?

    Determine your family's total monthly income.
    This includes all regular sources of income.

    Examples:

  • Salaries and Wages


    • This is the amount left after all deductions are taken out.
    A weekly paycheck can be multiplied by 4.3 to get the monthly amount.
    Record the monthly amount.

  • Interest and Dividends


    • From bank accounts or investments
    Record the monthly amount.

  • Other Sources


    • Food Stamps, Child Support or Alimony payments, Social Security Benefits.
    Record the monthly amount.

    Add the monthly amounts from above to determine your monthly income.

    Determine your family's total monthly expenses.
    This includes fixed and variable expenses.
    Fixed expenses stay the same each month.

    Example:

  • Child Care
  • Property taxes
  • Loan payments
  • Car payments
  • Insurance
  • Rent or Mortgage


    • Variable expenses may be different each month.

    Example:

  • Personal items
  • Entertainment
  • Medical
  • Phone
  • Utilities
  • Gas or bus fares
  • Clothing
  • Food


    • Don't forget expenses that only come up every few months. Divide these by the number of months they cover to get the average monthly expenses.

    Add the monthly amounts from above to determine your monthly expenses.

    Now compare your income to your expenses.

    Income > Expenses - Great! You can use the leftover income to set up your emergency fund, which should be enough to cover several months' expenses. Once you have that completed start working on your short-term and long-term goals.

    Income < Expenses - You will need to work out a plan to save money. Maybe you could eat out less, move to a cheaper apartment or get a roommate. Other options may be to take on another job or upgrade your current skills to get a higher paying job.

    Set up your budget

    Step 4

    You're ready to set up your budget.



    Your total savings and expenses should match your total income.

    Tips to make your budget work

    Step 5

    Adjust your budget if changes occur in your:

  • Income
  • Expenses
  • Family size
  • Goals


    • Use credit wisely

  • Charge within your budget
  • Pay off the balance each month


    • Use other forms of transportation to save on gas

  • Biking
  • Walking


    • Conserve Energy

  • Use energy efficient appliances in your home
  • Contact your local utility company for energy-saving tips


    • Become a smart shopper

  • Make a grocery list, stick to it and use coupons
  • Compare prices before purchasing and ask yourself if it fits in the budget and if you really need or want it


    • Pay bills on time

  • Late payments can create penalty fees that will cut into your budget


    • Get Organized

  • File bills, receipts, cancelled checks, etc… so they can be easily accessed later
  • Review your checkbook and records monthly


    • Follow your budget faithfully and adjust when necessary!

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