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Reducing Debt by Sticking to the Family Budget

There are a Few Basic Steps to Budgeting

How do you make and stick to a household family budget? What is a family
budget and why do you need one? "Because Debt Happens." - and it can
happen fast.

1. Get Organized & be Prepared

First things first. Before you set out to write out your incoming and outgoing funds, you need to spend some time getting organized and locating some financial records. You'll need to have the following available for reference (if applicable):

• Paycheck stubs (or copies of automatic deposits)
• Copies of your regular monthly bills
• Yearly tax returns
• Records of misc. income (bonuses, etc)
• Checkbook (or register)
• Misc. monthly receipts (haircuts, gifts, etc)

2. Time to Write it All Down

To see what you're spending, you have to keep track of what your family spends on a regular, monthly basis. This is usually your "constants" - the monthly bills and mortgage or loan payments that go out every single month. This is easily accomplished by using our free, helpful Budget Worksheet.

Don't be concerned if you end up needing to go back and add in expenses or items that you forgot. Until you get a handle on your budget, that will happen. It helps to budget in a "little extra" to cover these little descrepencies.

What about expenses that are NOT monthly?

There will be things that "come up" irregulary like birthday gifts, haircuts, car registrations and things of that nature. It will take a little bit of a different strategy to make sure you have enough money available to cover these items. You need to plan ahead, if possible. For a car registration, that's easy - it's the same amount, every year, at about the same time. If you know it's going to be due in, say, 6 months, then allocate your income so that you will have that much saved up by the time your registration is due (car registration amount divided by 6 = monthly "short term savings"). Once you have made this payment, you will be able to allocate this "short term savings" to another expense category of your budget.

3. Devise a Budgeting Plan; Set Your Goals

If you've recorded all of your income and expenses, then you have just become aware of how much money you have left over for savings, emergency funds, etc.

If the number is negative, your expenses outweigh your current income. Don't be disheartened. All you need to do is improve your spending habits and things will get back on track in no time. Committ to cutting unnecessary costs where you can. Your budget is a tool used to keep your personal finances in check, but it isn't set in stone. It will take some time to see and get a feel for your spending habits. The real trick is to commit to it because there will be great benefits in the long run.

If you're lucky and in the positive, then don't forget your "long term savings"! That is truly what is going to help you reach your destination. Everyone's goal is going to be different; it may be retirement, investments, college tuition or to have an "emergency fund" set aside. Whatever it is, even setting aside as little as $20 per month will help you get there, but it must be included in the household or family budget.

4. Track Spending to Meet Those Goals

Ok, now you know where you don't want to be, but you also know where you do want to be and have implemented your budgeting plan. All this step is about is sticking to that plan to see your goals become a reality. Track your spending, weekly or monthly, which ever is easier for you, and reap the benefits.

Keep in mind, the idea of creating and following a budget is NOT to make your life miserable, but to make sure you have what you need when you need it...and then some.

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