Ways & How

how to make a family budget

how to make a family budget

Managing your money is not easy, especially when you are always operating on a very tight budget. At any rate, you still need to study how to make a family budget so you don’t go overboard on your expenses. Many couples are claiming that making a household budget is actually a lifesaver. Having a budget allows you to see how much money you have and where your money is going. Telephone bills, mortgage payments, rental fees, day-to-day living expenses, and the rising cost of basic commodities can all cause your money to disappear in an instant. Therefore, to better appreciate how your money is helping your family as a whole, make a family budget. The following tips can help you:

  1. Identify how much is your total monthly income. Your regular paycheck or paystubs can tell how much you earn every month and for the whole year. This should include the income of your spouse along with any other income like business returns, interest, child support, or Social Security. Your other option is to review your IRS W-2 form covering the previous year so you will know your gross income in a year.


  2. Indentify your income sources. Generally, you have regular income sources and variable income sources. The first category refers to fixed salaries or wages earned on a monthly basis. The other category refers to other sources of income that yield different amounts like stock sales, business, real estate sales, etc.

  3. Identify your monthly expenses. Generally, you have fixed, variable, and optional expenses every month. The first category refers to the regular bills you pay every month such as: rental fees, utilities, mortgage payments, telephone bills, food, transportation costs, insurance premiums, federal and state taxes, etc. The second category refers to things that are difficult to itemize such as: parking fees, donations, pizzas, cigarettes, nights out with friends, etc. The third category can be items such as: a dinner date with the whole family, a vacation, out-of-town trips, or shopping, etc.

  4. Do the math. After you have identified your fixed total income, deduct the fixed expenses and get the remaining fixed total income. If the remaining amount is enough to cover the variable expenses, then do the subtraction. If not, add your variable income to the remaining fixed income and then deduct the variable expenses.

    There are some couples who include the amount of savings as a part of the fixed expenses. This rarely happens since savings are not obligatory in nature compared to fixed expenses. Many financial analysts advocate the following: save first and then spend the remaining amount rather than spending first and then save the remaining amount. Either way, the choice is yours depending on your financial capacity.

  5. Make some modifications. If the family is going overboard, amend your budget. Since you can hardly modify your sources of income, you should modify your expenses. Remove from the budget the optional expenses. Try to minimize the variable expenses so you can safely operate within your income range.

  6. Know the necessity of saving money. It is really a wise idea to have savings or incidental funds in reserve. By knowing how much to save every month, this can help you prevent impulse buying. Develop a habit to always choose to save than to spend on unnecessary items.

These personal budgeting tips can really help on how to make a family budget. Of course, having a budget does not mean you will have more money. Your family budget planner is only a guide so you can eliminate unnecessary expenses. Limiting your expenses on non-essential items can help you make a savings for future use. Also, it is good to encourage your children to participate in the budgeting process so that they can develop a habit of saving money which they can apply when they themselves become parents.


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