It’s not how much money your family has, but it is how you spend it that counts. Practicality is needed when learning how to manage family budget. Living within your means is the only way to avoid deficit spending. Start budgeting your way out of poverty – even if it means that you have to temporarily downgrade the quality of your lifestyle. Here’s how:

1. Regardless of how much income you’re generating, first be thankful that you have a job. Even better if you have a regular job with benefits such as medical insurance, savings funds, housing loans, social security and more. Your salary and these benefits are your steady income. The money you get from your part-time job, bonuses and allowances received will be your temporary income. Track all these receivables and get the average of your steady and temporary income.

2. Categorize your spending into fixed and flexible expenses and get the average for a monthly basis. You can do this accurately when you are recording all the expenses made. Basic commodities are your fixed expenses for food, shelter and clothing. On the other hand, items that can be adjusted or eliminated are called flexible expenses.

3. Aside from the basic needs, you also have to plan for education, retirement, health insurance and home mortgage plans. These expenses must be designed in such a way that the basic needs will not be affected and the future goal will be to make the family’s lifestyle more secure and comfortable. Public facilities are the best resources for families who have nothing to spare for these expenses. Survey your area for these services before sparing some budget on them.

4. It doesn’t matter how much fixed income you’re getting. To secure a brighter future, follow this formula: steady income minus pre-determined minimal savings is equal to amount for the expenses. It’s good enough even if you can spare only 5 to 10 percent of your income for savings. Monthly bills must be taken out from the remaining amount after deducting a small amount for savings. Discipline is needed to be able to follow this winning formula.

5. You may adjust your spending to augment your lifestyle using your temporary income if you have any. Since this is not permanent, do not take on expenses that will result in a monthly billing. You can enhance your wardrobes, go on a holiday and celebrate in style using the temporary funds, but never enroll your children into exclusive private schools if your steady income cannot support it.

As much as possible, do not rely on your credit card to supplement your needs and wants. Use this only for emergencies. Learning how to manage family budget is easier when you use computerized budget software or a spreadsheet to record your financial affairs. This will help you get organized for future revisions according to the rise and fall of your income. Never neglect to spare some cash for savings because this can sustain your livelihood if you suddenly lose your job.