Creating a monthly family budget is a challenging job. It takes time to master the skill of balancing cash inflow and cash outflow. Yet, this is a very important task to control our finances, if not, it would be otherwise.
Sit down for a few hours to think on the things involved in budgeting. Good planning is the key to create a successful household budget. But, execution is the best way to overcome the challenge and find your way to financial stability.
To be able to make it possible, even if how demanding it seems, break it into a simple method. And, get started. So, let’s get the ball rolling!
Easy Steps to get you started
STEP #1: Determine your goal.
Setting a goal is a very important step. This creates the map on where the plan is going. For whatever reason you have in mind, this becomes your lead. And your motivation in sticking to the monthly budget for the family.
Also, it must be specific, measurable, accurate, and realistic and, time-bounded – SMART.
Writing your goal will also help you get focus and reminded of your goal.
STEP #2: Select the budgeting style that fits you.
Recording your cash inflow and outflow using a pen and paper are still common today. Using an accounting ledger, you can write down the ins and outs of cash. A working calculator is also needed to help you in the computation.
Though manual is still an accurate way to notate income and expenses. An electronic budgeting software will make your job a lot easier with fewer errors too. Visit Mint.com to sign up and create an account for a budgeting tool.
STEP #3: List everything that affects budgeting
U.S News and World Report suggest separating the incoming and outgoing. Anything that has something to do with the finances must be included. Like income statement, bills or receipts must be listed and categorized. Get the total of the incoming amount as well as the outgoing. At this point, you will be able to determine which amount is higher.
In most cases, income is smaller compared to expenses, hence budgeting will come in.
STEP #4: Study and check the expenses.
This step will help you determine the specifics of the outgoing category. It includes utility bills, mortgages, and credit cards. Also, another necessary spending like food and clothing needs review.
Draw your attention to optional spending. That is usually incorporated into your necessity, like expenditures for recreational activities. Keep an eye on this subcategory since it will go up fast without us being aware consciously. It is wiser to control this spending as this is the only option that you can divert money to pay off debts.
Control and be mindful.
STEP #5: Debt pays off.
Most of us want to become financially free. That is the reason for budgeting with the hope of getting out of the rat race. The way to make it happen is to pay debts each month, at least. But, if you’ll pay higher than that, it will decrease the debt and makes interest lesser.
Monthly family budgeting is a mixed-up, but it doesn’t say it is difficult. Self-discipline is a key to make budgeting work easier. We just need to live on by our means. Getting aware the real value of how much we only earn and spending only within it.
Do not spend beyond your capacity in order not to blow up.
By knowing our income, liabilities and the outflow of the money, we gain control over our finances. The challenge though is to decide which one to sacrifice to cut or minimize to live within what we earn.
In cases of payments are still much greater than the inflow, extra income can be a solution. Or, you can find your way to a free credit counseling service for a more informed decision you can make.
Nothing is impossible if you believe and act on it.