Household budgets can help families thrive and survive should unforeseen financial issues arise. Establishing a household budget is no small task, as numerous factors must be considered to come up with a budget that secures families' futures without sacrificing their everyday quality of life.
Finances
To develop a budget everyone in the household can live with, heads of household should first get a firm grasp of their finances. First determine how much money is coming in and how much money is in savings. Then make a list of the family's financial obligations, including costs associated with housing, food, transportation, utilities, and other monthly bills like student loan payments. Be thorough in this examination and you should get an idea of how you're spending your money and where you can make any cuts if need be.
Behaviors
Heads of household should make honest assessments of their behaviors with regard to money. Are you prone to impulse shopping? How closely do you track your daily spending? Can you cut back on certain daily expenses, such as morning cups of coffee from the coffee shop or restaurant lunches? While you might have little leeway with regard to large expenses like car and housing payments, you can likely save substantial amounts of money by cutting back on small, daily expenses that can add up to substantial amounts of money over time. Track your behaviors with regard to "spending money," jotting down each purchase you make, no matter how small it seems. After a couple of weeks tracking your daily spending, a picture of your financial behaviors should develop and you can then see if there are any areas where you can save money.
Determining a need versus a want
Once you see how you behave financially, you can then make a list of those daily and monthly expenses that qualify as a need and those that fall into the "want" category. For example, morning coffee might be a need, but why not brew that coffee at home and take it with you rather than buying a costly cup at the coffee shop near your office each day? You can keep some of the items that fall onto your want list as a daily or monthly reward, but try to eliminate those that are compromising your monthly finances. And remember to include contributions to a savings account in your list of needs.
Build your budget
A firm grasp of income, bills and behaviors and the knowledge of what's a need versus a want should put heads of household in position to develop their budgets. Stick to your budget for a month and then assess how you and your family adjusted. While the adjustment might prove difficult at first, by the end of the first month you might notice any financial-related stress you had been feeling has begun to dissipate, and you might even make an effort to tighten the purse strings a little more as you look to save more money.
