- Use a pencil and notebook to set up your budget or invest in software to keep your budget online. Income is the amount of money that comes into your household after taxes. It can also result from other venues, such as having a garage sale or babysitting for someone. Write down your income to determine what you have to work with in your budget each month. Every dollar should have a name or designated place to go, even if it is into a savings account or money to spend on leisure.
- Expenditures are the regular expenses you incur in your life. It is a wise idea to track your family's expenditures for one month. Have everyone write down or keep the receipts on where they spend their money, even if it is just for a pack of gum. This will quickly show you where money is being wasted. Variable expenses are items like the utility bill or gasoline costs. The amounts on variable expenses may change each month. Fixed expenses are those that remain the same, whether you pay them monthly or quarterly, such as insurance premiums or the rent or mortgage payment. Write down all your monthly expenses in your budget notebook or enter them online. Don't forget to treat your savings account just as you would a bill. Putting money consistently in a savings account each month is a habit you need to obtain, if you don't already do it. Having a emergency fund or savings allows you to pay cash for emergencies, such as an auto repair, medical emergencies or a broken appliance. This prevents you from having to use a credit card or obtain a loan to cover the expense. Just as important is to designate money for leisure activities. If you have a tight budget, this may only include the money to rent a movie once a week for your family to enjoy together. If possible, give each family member an allowance. This allows them to have money to spend as they choose or to save for an unnecessary luxury, such as new roller blades or an attractive purse. Make sure you include a miscellaneous fund for expenses like haircuts, vet visits and other irregular expenditures that may come up during the month.
- Debt repayment is a must for any family who is stressed financially due to unmanageable and out of control debt. Strive to set aside every extra penny you receive to paying off your debt. Paying down debt allows you to enjoy life without the added burden of high interests rates and payments you can't afford.. Start with your smallest debt or the one with the highest interest. Pay it off as quickly as you can while paying the minimum on your other debts. Once you pay off the small debt, use that payment to add to the minimum payment on the next largest debt. This has a snowball effect that inspires you to continue until you are debt-free.
- Savings for short-term goals should be included on your budget. The most important short-term goal should be establishing an emergency fund. It is advisable to have three to six months of savings in the case of a layoff or job termination, illness of a family member or other type of crisis, according to the Bankrate website. Short-term goals may include a family vacation, new recliner, bicycle or the addition of a family pet. Designate a certain amount of money to save each month for the short-term goal. Living within your means should be a way of life. It is uncomplicated to make budgeting a way of life, it is a habit just like most other things you have to learn.
- Long-term goals include college education for your children, retirement and other goals that you may spend many years reaching. An important long-term goal may be to pay off your home mortgage. Planning for long-term goals means that you can retire when you choose and don't have to worry about living comfortably in your golden years.