Five Simple Steps to Create a Family Budget

Since I was a child of frugal parents, I don’t like to spend full price for anything. My husband and I are both very frugal but we struggled to manage our money for many years because we didn’t have a plan. Since we were married, we have never been a couple with two incomes. This meant that we had significant student loan and credit card debt as we struggled to make ends meet on one income. We made some progress with my couponing skills, and we have been living a more frugal life over the last 5 years. However, it was slow going and financial stress was always an issue in our marriage. We didn’t have a plan for dealing with financial emergencies or how to pay down our debt. We didn’t have a plan for dealing with financial emergencies. Instead, we tried to cut costs wherever possible. It wasn’t until Dave Ramsey Financial Peace Class (12 weeks) that we had a plan that covered everything, from setting up an Emergency Fund to paying off debt to saving for retirement. This class is highly recommended to help you take control of your finances. There were so many great tips on how to manage money. But the most important tip was how to create and keep a budget. This is the most important thing a couple or person should do to have a plan and a sense of control over their finances. An interesting article titled Women Money: Why You Need to Take Control Now, talks about how women should be more involved in managing your family’s finances. Discussing finances and how to deal with it on a regular basis should be a joint decision between the couples, and not just one person. You need to agree on where your money is going, how you plan to reduce your spending, and what you are saving. My husband and I have been able to work together on our finances and our budget, and we are now debt-free. This is because we have a plan for how to manage our finances.

Tips to Create a Household Budget

1. Keep track of your spending for between 4 and 6 weeks

This is the best way to figure out your budget. You need to know how much you actually spend each month. Track your expenses on all bills (utilities and mortgages, car payments, school/college), household spending (groceries and household items), as well as your spending on entertainment, gifts and fuel. You can either use an Excel spreadsheet or a simple notebook to track every penny you spend. You can keep a small notebook in your pocket or in your car to track all the small, inconsequential purchases that add up over the course of the month. You can also use a program like to track your spending. However, it is still necessary to account for cash purchases. You want to have a clear view of your financial picture on a regular basis.

2. Make a list of your monthly expenses

After you have tracked your spending, it is time to compile a list of all your expenses. You will need to identify which expenses are fixed or set expenses. These expenses include car payments, cable/trash, mortgages, and other expenses that don’t change much. Next, list all variable expenses such as entertainment, gifts, dining out, and entertainment. This budget can be created on paper by listing out all expenses. Or you can use the Genworth Financial Easy Budget Calculator. You can look at expenses from both fixed/fixed and variable angles to help you reduce your budget. You should also consider the expenses that arise on a quarterly basis. This will help you not forget them and make it easier to budget for future expenses.

3. Make a plan, and stick to it.

This is an important lesson that we have learned. It’s not enough just to have a budget. You need to know exactly where your money is going. This is known as a Zero Budget. Before you start spending, know exactly where your money is going. It is important to know exactly how much you will spend on groceries and gifts. If you don’t use it, you can put it into savings or pay off debt. An emergency fund is essential! You can decide whether to put it into savings, a vacation fund, or if you will use the extra money in the next month to keep your budget within reach. You don’t have to know how much you’ll be paid for your job. However, you can set a budget using the lowest amount you are allowed to be paid. Then you can plan what you’ll do with any extra money you earn that month. You need to figure out where the extra money will go. You should also start saving money for future expenses such as Christmas and birthday gifts. Make sure you have money set aside in your budget so that you don’t get caught later having to borrow money from another part of your budget.

4. Reduce your spending in all areas.

This is where things get tricky. It’s why it’s important to do it together. This can be difficult, at times, to compromise with your spouse. My husband is the one doing the shopping in our household. He challenged me to not cut the budget in areas I was having difficulty reducing. It is important to determine the budget amounts you will spend in each of these areas. It’s better to be generous in the beginning, if you can, during the first month of your budget. This will allow you to adjust as you become more disciplined about sticking to a budget. You should start to tighten your budget after the first month. This will allow you to identify areas that can be cut or lowered to lower your household budget. You might consider eating from your pantry for one week per month if you have trouble finding ways to keep within your grocery budget. You might cut back on dining out for a night a month in order to reduce your dining out expenses. But,

5. Regularly review your budget and make adjustments.

The first month, or even the first few months of a budget is not going to be perfect. It is a continuous process where you and your spouse meet to discuss where you can cut the budget, or add some money if it becomes too difficult to stick to the budget. Although it can be difficult to create a budget and keep it in line, it has been less stressful for me because I know where my money is at all times and where it is going. If you don’t adhere to a budget, it is easy to wonder why you can’t pay your bills or where all the money went. Although this is a general guideline for setting up a budget, I hope it helped you to get some ideas. Your suggestions for how to set and stick to a budget in your family are welcome.

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