Just because you’re not filing bankruptcy yet, it doesn’t mean you’re doing a good job with your finances. Like the other 78 percent of Americans, you’re probably living paycheck to paycheck, which isn’t good. A single financial emergency could quickly throw your life completely off track.
However, don’t give in to panic just, yet. We’re here to help you. Continue reading for our top tips on how to start preparing a budget to keep your household spending in control.
Dig Into Your Finances
First, in order to start making positive changes to your financial situation, you need to know all the details:
- How much money is coming in each month?
- How much money is going out each month?
- Where is it all going?
Start by writing down all forms of revenue coming into your bank account. This includes you and your partner’s job, investments, benefits, and all other forms of income.
Next, make a list of every expense in the household. Organize it based on bills, groceries, utilities, and luxuries (eating out, entertainment, subscriptions, memberships, etc.).
Finally, add up your income and subtract your average monthly expenses to see how much money you’re leftover with each month.
Figure Out Where You Can Cut Back
As suggested above, if you’re like most people, odds are you have little money left at the end of each month. That’s okay, we’re going to fix it.
From your list of monthly expenses, create a new list of all the expenses that aren’t vital to your family’s day to day living. Take an objective look at the list and figure out what you can cut out or downgrade to save money.
Here are some examples:
- Cancel movie channel subscriptions
- Use a streaming TV and movie service (just one) instead of cable, which can be five times as expensive
- Look at your phone bill and see if you need all of the features you’re paying for
- Cancel unused gym memberships, magazine subscriptions, etc.
- If necessary, consider downsizing your home and/or car
- Cut back on dining out
- Only set off for the grocery store with a specific shopping list (and stick to it)
Start Keeping Track of Every Dollar Spent
Another tip for preparing a budget to keep your household on track is learning to record and file all of your expenditures. You can do this with pen and paper or invest in some budgeting software which will do a lot of the work for you.
We recommend using QuickBooks Desktop. This software comes with free online training on how to use the program as well as a 60-day moneyback guarantee, which gives you nothing to lose.
Plan for the Future
Finally, preparing a budget for your family doesn’t mean simply learning how to have more money left at the end of the month. It’s also about planning for the future.
Are you planning on paying for your kids to go to college? What about your retirement?
We suggest starting by creating an emergency fund of at least $1,000 dollars, although, it’s ideal to have enough to cover a few months of expenses. Once you’ve established your emergency fund, it’s time to start putting money into a savings account and/or into investing.
Need More Help Preparing a Budget For Your Household?
If you’re struggling with managing your finances, we can help! Be sure to take a look at the rest of our articles before you go. We have information and advice on everything from preparing a budget to investing money and prepping for taxes.