Balancing your family’s budget doesn’t need to be hard work. Take a little time to set up a system and keep track of your household spending. Begin with broad categories and then decide to get more specific after you have a few months of tracking your spending under your belt. Whether you use a spiral-bound notebook or the latest budget software, you’re more likely to continue to monitor your spending habits if you keep the process simple. A few minutes a day, or about an hour a week, is all it takes.
Fixed Monthly Budget Categories.
These categories are usually fixed expenses that vary little each month:
● Rent/Home mortgage
● Rental/Homeowner’s insurance
● Utilities, including gas, electric, water, and trash (Some of these expenses will change according to the season, but attentive budgeters can anticipate seasonal differences)
● Cable television
● Savings (retirement and short-term)
● Auto payments
● Loan payments
Variable Monthly Budget Categories
These are necessities that can fluctuate each month
● Groceries/cleaning supplies
● Dining out/school lunch
● Home and yard maintenance
● Gasoline and parking
● Public Transportation
● Personal care products
These expenses are ones you pay annually, semi-annually or bi-monthly. Add a year’s worth of expenses in these categories and divide by 12 to see how they fit in your monthly budget.
● Automobile insurance
● Recreation and entertainment
● Medical and dental expenses
● Automobile insurance and maintenance
● Books, magazine and newspaper subscriptions
● Vacation and travel
Try to track every family members’ purchases for at least a month to get a clear picture of how your household is managing money. Record every candy bar, double latte and trip to the driving range your family members purchased. Chances are you will begin to see areas in which you can cut back almost immediately after you start tracking your budget. You have to pay your mortgage or rent, but do you have to subscribe to the premium channels through your cable service? Biking or walking to work can save on gas and parking expenses. Cut the double lattes back to once a week and you will save plenty over the course of a month.
If you are carrying a balance on a credit card with a high interest rate, cut back on non-essentials, at least until you can pay off your debt. After a few months of tracking your household budget, you can pinpoint the non-essential purchases that keep you from gaining freedom from debt and financial security.
The truly frugal will use the free version of Microsoft Money that comes bundled with your computer’s Windows software or the aforementioned spiral notebook. Old-school types might want to track their spending on columnar pads. However you record your purchases, remember to track all spending, from the pack of gum to new Ferrari.