Few among us can afford to spend their money without bothering about monthly bills and unexpected situations that could empty our wallet. For most, keeping tabs on how we spend our hard-earned money is a necessity, so here are five easy steps to make a family budget and stay within its limits.
1. Review your current spending.
Sit down and list what you usually spend money on every week: food, bills, clothes, car, etc. This will give you a pretty good idea what you can go without, in case you’re spending more than you should be. It will also most probably unmask some luxuries that you’ve been considering a necessity but can go without, or indulge in not so regularly. Try to do this for a longer period of time, if you’re in the habit of keeping the paper trail of your spending. If not, you can still get some idea by listing the usual things you buy over a typical week and then multiply by four.
2. Try a budget-making software product.
There is quite a choice of these out there, so get one if you feel it would be easier to leave the tracking of your spending to the machine. This, however, carries the risk of becoming too focused on every little thing you buy, so bear that in mind. Software programs offer, for example, a range of categories, such as clothes, car, child care, groceries, etc. where you enter the sums you’ve spent. This is a boring job, no doubt, but if you’re meticulous by nature, it may be the best solution for you. You can also use electronic banking to download all transactions, avoiding the tedium of entering them by hand, but in this case you’ll have to enter the categories by hand.
3. Make weekly menus.
Groceries are one of the few things we really can’t do without but most often we spend more than we need to and then throw food away, a situation that begs improvement. The way to do it is, first, make a weekly menu, and second, shop with a list. You may object that you don’t know what you’ll be feeling like eating five days from today, but you don’t have to list specific dishes, just a general idea will suffice and help you with your shopping list. Once you’re in the supermarket, stick to the list, don’t get lured by special offers for things that are not on your list. And one more thing: don’t go shopping for food on an empty stomach.
4. Set aside 10% of your monthly income.
You could set aside less, if you can’t afford 10%, but try to save some money every month, just in case. You can do this by setting an automatic transfer of whatever percentage you feel comfortable with into a separate account and to avoid the temptation of tapping it on a whim, restrict your access to it. Having money on the side is always a good idea — life is full of surprises and not all of them are nice or free. You’ll sleep much better knowing there’s a little something to go toward meeting unexpected expenses when they come up.
5. Track the little things.
Eating out, buying season tickets for whatever it is that you want to go to regularly, spa treatment, you name it. Now, you don’t have to give up all of these little indulgences but if you’re a bit tight with the money, you might consider skipping a night out or a spa afternoon until things get back on track or until your income rises to a level that makes these things more easily affordable. Speaking of income, one last word: when making a budget, only put in it the actual money you’re getting paid every month. Possible end-of-year bonuses or a pay raise after a promotion are just potential money for now. Only include them in the household budget when they become a reality.