Budgets can be hard. If you use the wrong type or try to overcomplicate it, you’ll find yourself on shaky ground without even knowing it. A simple family budget works well for almost everyone and is not as hard as you think! Use these steps to create a simple family budget that works for your family. You’ll be on track financially before you know it!
Budgets are hard ya’ll. Do you have one? I would hope so. By now, most of us are aware that having a budget can do a whole lot of good for our financial picture.
There is, however, a huge difference between knowing you should have a budget and actually having one that you stick to.
Like I said, budgets are hard. Sticking to them is even harder.
Why Is Having a Family Budget Important?
The entire point of having a family budget is to keep your money from controlling you. Yes, your money can control you and when that happens, you will often find yourself in the poorhouse faster than you can say poorhouse.
Here’s the thing though; even if you have a budget, your money can still control you. How? Because you need to have the correct budget for your family.
Just like people are different, budgets are different. There are so many styles to choose from and choosing the correct style for you and yours is almost as important as choosing whether you like your coffee black or with creamer.
How Do I Know I’m Using the Wrong Budget?
When you look at the budget you’re currently using, there should be a few indicators that it is actually working for your family.
They will include:
One the other hand, if your budget is failing, there will be signs of that as well.
They can include:
- Always paying your bills late
- Paying overdraft fees to your bank
- Living paycheck to paycheck
- Robbing Peter to pay Paul
Even if you aren’t sure what reasons are causing your budget to fail, if it is failing? It is failing.
Pure and simple and there is no negotiating or sugar coating it; budget failure is budget failure.
Why Income Doesn’t Always Matter to Your Budget
Surprisingly, your income does not have as big of an impact on your budget as you may think. Sure, it does affect it, but the real culprit to a budget failure is often your spending habits.
Let me say that again for the folks in the balcony; without proper spending habits, no budget in the world is going to work for you.
Do a Financial Audit
It’s important to know what your spending habits are before you even try to create your family budget. Your spending habits define how much money you have to spend, where your’re wasting money and so much more.
In fact, you should be doing a financial audit quarterly, but if you’re not, now is the perfect time to start. At the very least, you will need to do one to assess your spending habits so you can set up your new budget.
I am not going into a deep explanation of how to do a financial audit here, but THIS post explains it fully for you.
Once you have your financial audit done, you are ready to continue.
Choose Your Budget Type and Method
You’ll have to decide which budgeting method iand style is right for you.
Let me help you; for most families, a very simple family budget works best.
This means something that simply lists your income, your expenses, and any money you are putting toward your savings account.
If you use either one of those, I highly recommend you invest in an account ledger such as THIS one to simplify things for you or your accountant.
Other options you may want to check out:
- Using a cash only budget
- A Budget Planner
- Spreadsheet Budgets
- Printable Budgeting Sheets
- Budgeting Apps
- Dave Ramsey’s EveryDollar Budgeting Software
- You Need a Budget
- Quicken Budgeting Software
- Quickbooks Business Accounting and Budget Software (30-day free trial)
- FreshBooks Business Budgeting and Accounting Software
How Often Should I Budget For?
I have tried it the other way. Let’s just say it didn’t work out well for us and leave it at that.
I then do a monthly “snapshot” that includes our total income and our total expenses for the month. The combination allows me to see at a glance that we are okay for that month. The weekly budget keeps me on track.
In other words, budget as often you need to but at the very least, budget once for each paycheck.
Remember that financial audit you just did? Here is where it comes into play.
List your expenses first. Write them all out on a sheet of paper wit their amount and how often they’re paid.
This is the time where you need to decide whether to cut the money you’re wasting or not. I can almost guarantee you’re wasting money somewhere.
If you’re wasting money on things that are necessary such as overspending at the grocery store, it’s time to find ways to reduce your expenses.
This can include things such as:
- Find ways to save money at the grocery store
- Using tips to lower your electric bill
- Fighting rising prices at home
- Learning money saving tips form the Great Depression
- Getting extreme about saving money
- Knowing Want vs. Need
Once you have worked out a way to reduce your expenses, add the remaining ones to your budget sheet, book or app.
Congrats. This is the amount of money you will need to come up with for each budget period.
Add Your Income
Now you will need to add any income you have coming in during your budgeting period. This could be paychecks, child support, alimony.
Basically if it pays you, you want to add it to your budget. Leaving money unbudgeted is a great way to find yourself wasting it.
It sounds harsh, but it’s true; if you don’t account for every dime in your family budget, that unaccounted for money will control you instead of the other way around.
I personally favor separating our income in our budget and then combining it into a large total, but you should do what works for you. I find that it helps me keep track of things better if I know what to expect from each individual paycheck vs one large sum. Having the total at the end is only so I can ensure there is enough money to cover our expenses.
Putting Your Family Budget Together
However you choose to add your income, go ahead and do so then subtract your expenses from your total income.
Now here’s where things can go sideways for a lot of people; take any – and I do mean any – money that is left over and earmark it for your savings account.
If you do not, you are giving yourself permission to waste it. Instead, mark it for building a better future and then actually move it to savings once you have it in your hands.
Move that amount first. Don’t wait until everything else is paid. You’ll spend it if you do.
What if I Don’t Make Enough Money?
First, breathe. If you don’t make enough money to cover everything in your family budget you have two options; either further reduce your expenses or make more money.
Since my own expenses are already as low as I think I could possibly get them, I opt for the second option and favor side hustles to earn more money.
Things that you could do to earn extra money fast include:
- Doing surveys on InstaGC
- Doing offers, surveys and more on Swagbucks
- Doing other survey companies such as Toluna or Survey Junkie
- Play games on your phone to earn money if you have an Android
- Delivering for DoorDash
- Driving for Uber
- Starting a blog that will earn you money
- Freelance writing
- Cleaning a neighbor’s house
- Mowing lawns, raking leaves or shoveling snow
- Doing childcare in your home
If you absolutely cannot – or will not – earn more money when you need to, your only other option is to keep chopping at your expenses.
In this case, go back to your financial audit and re-start the entire process again.
Keeping Your Family Budget On Track
Finally, don’t fall into the trap of not checking your budget often. If you forget about the work you’ve done, you can bet your budget and your finances in general will spiral out of control again.
Make updating your budget a weekly affair. If you have a spouse or partner, be sure to include them. The family finances are a family affair and everyone should be involved; including older children who need to learn how to manage money correctly.
All of this may seem tedious, but it is well worth doing. At the end of the day, you’ll feel a huge sense of relief knowing that everything is covered and that you’re well on your way to a better financial future. After all, isn’t that the whole point of having a family budget?