In order to start to get your finances in order, It's best if you know where you stand in the reality of things. My hubby and I are both disabled, so we have no choice but to live on a very strict budget, as we only receive income once per month. Right before we get paid, I write what our income is, followed by what bills are due for that month.
Below is a tip on how to create a beginners budget for your family.
Steps to creating a budget
1) Make a list of all of your monthly expenses (ALL of them).
My categories are: Mortgage (or rent), Electric, Cable/Internet, Car, Insurance, Gas, Groceries, Misc. (Clothes/Extras/Drs. Copays/Car expenses), Splurges (movies, coffee, going out to eat)
You may also have credit cards, other loans, etc. You have to list all expenses and add all of your expenses together.
2) Now write down all of your income per month.
Do you have more expenses than income? If so, you are living beyond your means and you will not get out of debt until you turn that around. If you are living below your means -- great! Now you have to turn the surplus into an emergency fund and towards paying off any debt.
What to do if you have more expenses than income:
1) Either reduce your expenses or increase your income. In this economy, increasing your income is challenging, but you could offer do help others as a side job for some extra cash.
2) First off get rid of expenses you don't need (at least temporarily). A short term inconvenience is worth a long term financial peace. Hubby and I had a habit of renting furniture, we eliminated that expense and bought used items, in great condition via craigslist. The bonus was, we got rid of a re-occurring monthly bill.
Cable/Dish: Get rid of cable/dish (or if you simply can't do without it) call and reduce your package. We pay $110/month for our cable/Internet/phone package (which includes a few bonus channels). If you get tons of channels, most likely you aren't watching them all. Ask to speak with Customer Retention and tell them a competitor (I would use a name of a competitor in your area) is offering you a better deal. I bet they will knock $10 off your bill right away.
Cell Phone: Do you need it? Be careful of canceling while under a contract, but at least get rid of extra features such as texting, internet and so forth.
Splurges: First I think we all need splurges to keep on track on a budget, but lets forgo them for a while. For example, if you go out to eat a lot, let's agree to stop going out to eat for 3 months and cook all of your meals in. After 3 months add this back in, but maybe as a monthly splurge. Instead of taking a family of 4 out to the movies (costing you $50-$100), rent a movie and have a family movie night (cost lower than $5). Instead of going to a park that charges for entrance, try going on a hike in a public park, or to the playground.
Groceries:
We Use Coupons is full of ways to reduce this expense, but in order to make this whole thing work well, stick to your budget even if the deal is GREAT! I use coupons often and save a lot alone doing that, so I set aside a certain amount for groceries each week and never go beyond what has been allotted. Sometimes, I miss a super sale, but I have to do my share to keep expenses down.
Extras: Hubby and I just don't have this factored in our budget, because we simply cannot afford it. We are trying to improve, but right now, it's more important to have an Emergency Fund established.
Loans/Debt: If you are living beyond your means, you won't be able to get rid of this. So lets think here -- could you sell a car and get rid of the payment and buy a used car? If that isn't an option, how about you get together stuff you don't use anymore and having a yardsale, selling it on Ebay or through Craigslist.
How to Make a Budget
Now that you have your list narrowed down, let me tell you how to make it work. Get a spiral notebook and break your budget into when you get paid (ours is one set monthly payment plan, your may be weekly or bi-weekly).
Ours looks like this:
Income from Hubby:___________
Income from myself:___________
Amount in Bank:______________
Total Income for August (use whatever date for yourself):_____________
Mortgage $______
Electric $______
Car Pyt $______
Car Ins $______
Insurance $______
Cable $______ (ours is cable/phone Internet)
Ins $______ (we pay for our sons medical insurance)
Food $______
Gas $______
Total all expenses $______
Followed by a snapshot
Income $______
Expense $______
Amount Leftover $______
_______________________________________________
Now every time you get paid, pay your bills according to your notebook and check them off as you go.
