A solid, well-planned family budget is essential in today’s fast-paced financial world. But that budget needs to work for you and your family. It also needs to evolve. We have seven tips to help you build a smart budget you can live with today and for years to come.
- Know your actual income. Every budget starts by knowing how much money you bring in monthly. To get that number, simply add up your total household income minus taxes. Do not include side jobs or other unpredictable income. Every year, review this number and adjust your budget as needed.
- Write down your expenses. Start with your fixed expenses, including housing (rent or mortgage), car payments, loans, and utilities with set monthly amounts (internet, garbage, wireless phones, etc). Then, estimate your variable expenses. These include food, gas, and utilities such as electricity. If you’re not sure how much you spend, look at your credit card statement or checking account.
- Add up your entertainment expenses. Include every music, movie, and streaming service your family has. Don’t forget about eating out (be realistic and honest with yourself), as well as activities for the kids, hobbies, and specialized apps that require a monthly fee.
- Set savings goals. Then, think of those goals as a monthly expense in your future. Do you want to take the family on a vacation? Are you hoping to save up for the down payment on a house? Calculate how much that will cost and how long it will take to save the total amount with monthly savings account deposits.
- Add everything up. That includes your bills, expenses, and savings goals. Does the number surprise you?
- Subtract those expenses from your total income. The goal is to have more income than expenses. When you do, you can use that extra money to pay off high-interest debt or save it. However, if you have a negative number, you’ll need to remove some expenses to ensure you have enough money every month to pay the bills. Start by eliminating entertainment expenses, then reduce how much you spend on things like wireless phone plans, home internet, and more.
- Adjust as needed. A good budget is not written in stone. As your family income increases, you can add other items to your budget, including entertainment and more. Equally, if your income drops or you’re faced with a financial emergency, adjustments to the budget can help keep you out of unnecessary debt.
Boost Your Financial Wellness
More Financial Wellness Matters blogs on topics ranging from financial self-care to protecting your financial health are coming soon. Twice a month, we’ll dig a bit deeper into the relationship between financial health and overall well-being, shedding light on the behaviors and beliefs that drive money relationships. With simple tips and proven insights, we hope to enhance your financial well-being and help you live a healthier, happier life.