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10 Tips for Setting up a Usable Family Budget

10 Tips for Setting up a Usable Family Budget

Money comes and money goes. The problem is making sure to know how much is coming and where it is going. Following are some tips for setting up a usable family budget.

1. The Percentages

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Experts recommend saving at least five percent of your income. You should also use 15 percent for debt. And finally, use only 25 percent or less for mortgage or rent.

2. Track Your Money

In today’s world of online banking, it’s not enough to know where your money is going on a week by week basis. You should know where it is going every day. If you track your money online, you’ll be able to know where your money is at any given moment. Checks can be a problem for keeping track of your money as it can take some time for someone to cash one of your checks. But that is where the next tip comes in handy.

3. Use a Written Ledger

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Always keep a handwritten or typed ledger. Do not rely on your banks online tracking for exact balance information. Checks might not be cashed. Transfers might not be complete. Write down every purchase you make or bill you pay. And make sure that the transactions match when they go through the bank.

4. Know Your Necessary Expenses

Necessary expenses, or non-discretionary expenses, are those expenses that you have to pay. Rent would be a necessary expense. Electricity is a necessary expense. Water is a necessary expense. You get the idea. But amounts are not always set in stone. For instance, what if the house you are renting is out of your price range because it costs more than 25% of your income to rent it? Find a cheaper place. Your necessary rent of $1000 a month becomes $500 a month just by finding a new place to live. If after that you still find yourself in financial strife, you could always consider a company such as SET Financial to help you through it.

5. Know Your Unnecessary Expenses

Do you really need cable? Really? You could always just watch television online. Do you need to eat dessert every meal? These expenses are not necessary. That doesn’t mean you shouldn’t have them in your budget. A budget will help you determine if you can afford them and if you need to do something about the prices. For advice of how to cut back on unnecessary expenses, click here

6. Know Your Fixed Expenses

Fixed expenses are those that stay the same every time. Rent is a fixed expense. Cable is usually a fixed cost. A budget is much easier to handle if you know what expenses will always remain the same. There are many free budgeting tools available online that you can take advantage of.

7. Know Your Non-fixed Expenses

Non-fixed expenses change every month. A common problem with a budget is the electric bill. A couple will create a budget in the winter time. The electric bill has been much lower because heating a house is usually cheaper than cooling a house. When the summer hits, their budget gets messed up because they forgot the bill would go up.

8. Use Cash

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Cash is a great way to curb spending habits. If you have budgeted $100 a month for going out to a restaurant, put that cash in an envelope. Pull cash from it every time you go out to eat. When you run out, stop going out to eat for that month. Once the cash has run out, you know to stop spending.

9. Set Realistic Goals

Anytime you limit yourself it is going to become hard to deal with. Don’t set goals that will cause you to stop following your budget altogether. For example, if you just can’t stand to be without a specific television show and can’t find any alternative way to view it, find a way to put cable into your budget. If you hate your budget, you won’t follow it.

10. Save and Pay Yourself

Finally, and most importantly, you must pay yourself. There are two ways of doing so. You can save money for later and spend some of the money on yourself. This includes the nest egg you plan on retiring with. What is the use of making money if you can’t spend at least a little bit on things that make you happy? Put some aside for a vacation. Buy a new board game you can play with your family. Do something fun.

About Ronnie E.

Ronnie is the frugal Latina of the group. Hailing from the beautiful Andes Mountains in Bolivia, she lives and breathes frugality. She loves to figure out how to spend less money and takes on the challenge of finding great deals and cheaper options every day.

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  • GossipMoms

    thank you for the family budget tips we all need to budget our money

  • klpmiller

    Budgeting is never “fun” but this is a great no nonsense guide that makes it a little less painful. Thanks!

  • 11hauz

    Thats the one thing I suck at, budgeting! Thanks for the amazing tips! Will get it in motion 🙂

  • Mary

    I’m horrible at budgeting, these are some great tips and I love the idea of a cash envelope. I might have to implement that one. Thanks!

  • Jessica Ann Jones

    I am definitely bookmarking this. We could use it!

  • Jennifer Van Huss

    These are great tips! I really need to set up a family budget. There are lots of items that are unnecessary in our lives. I really wish we could save money on them! Hopefully 2014 will be that year!

  • Liz @ A Nut in a Nutshell

    I do make sure to pay myself and save first before anything else. I sorta pretend that savings amount was never there to begin with.

  • WoodArtsUniverse

    Great info.. will Bookmark your website.. 2014 resolution will be to save more money and organize myself.

  • Craft Dictator

    I’m working on my budget right now for next year. I really needed to read this today! Thanks for sharing!

  • These are really nice and realistic tips. Thanks for sharing!

  • Kathy

    awesome tips. I need to be MORE realistic when writing my budget down…I know that I spend a little more in some areas than I write down.

  • Paula Bendfeldt-Diaz

    These are all really great tips. I would not survive if I did not keep track of my expenses every month. It really lets you see where the money is going and where you need to cut those expenses.