Many people attest to the fact that the hardest part about being an adult is having to be responsible with money. While it might be fun blowing money on fun things, not having a roof over your head is not much fun. To help keep a household running efficiently, it can help to have a budget.
Creating a household budget is not especially difficult. The ability to stick to that budget is the hard part. The basics of setting up a household budget are really very simple. The key is being honest with yourself and accurately accounting for where your money is going each month.
Write it down
First, figure out how much money comes in each month. A good way to do this is by averaging the income for at least the past six months. Writing down your monthly income is your starting point.
The next step is to make a list of all the fixed bills. For example, ones paid every month like rent, mortgage, utilities etc. Add the list up and deduct that from your monthly income. This is the set amount allowed for this category. You will have to over-estimate for bills such as utilities as in some cases the amount due varies according to usage.
Then make a list of household expenses like groceries, toiletries, clothing, vehicle fuel, etc. that are purchased each month. Add the list up and then deduct it from what is left of your monthly income. This is the set amount for this category.
Now make a list of all entertainment expenditures like going to the movies, eating out, sports, clubs, etc. Add the list up and deduct it from what’s left of your monthly income. This is the set amount for this category.
Next, make a list of miscellaneous expenses like oil changes, shopping sprees, books, music, etc. Add up this final list and deduct it from what’s left of your monthly income. This is the set amount for this category.
Trim the excess
Now you see what you have left after all your expenses are accounted for. Look over your lists and see if there is anything you can cut out in order to save money. Setting up a budget means that you have a set amount for each category.
It is wise to not go over those amounts in any given month. Seeing how much is going out and exactly where it’s going makes it easier to change spending habits. Suddenly, those high-priced coffee stops each morning may seem rather silly.
Living in the real world means that things do happen. Cars break down, the roof might leak, kids need braces and so on. The list of unexpected expenses is virtually limitless. It is these unexpected things that make the need for a household budget so important. If a budget is created and followed, money for those things becomes easier to come by.
In these difficult economic times, people may find themselves cutting back on many luxuries. Activities such as eating out and going to the movies can seem less important. In many cases, people are finding it difficult just paying the rent and putting food on the table.
Creating a basic budget and sticking to it may seem boring and tedious. It may feel like an impossible task with kids, car payments and a shoe loving spouse. Just sit down and give it a go, it can greatly improve your financial situation and give peace of mind.