The Secrets Of A Successful Family Budget

Large numbers of people end up with financial problems

, not because they've lost their income or had unexpected expenses, but solely because they are not used to drawing up a family budget. A budget is ideal to give you a clear picture of precisely what you earn every month and what you're spending it on. Let us briefly discuss the principles involved in drawing up a budget.

Begin the process by making a note of everything you spend for the next thirty days. Carry a notebook with you and write down every single thing you buy or account you pay. At the end of the 30-day period, use a spreadsheet or a sheet of paper to summarize these expenses. Create columns for the various kinds of expenses, such as rent, groceries, fuel, entertainment and repairs.

You will immediately have a clear view of your monthly income and expenditure. The first time you do this, you will undoubtedly be shocked to see how much money you spend on things that are completely unnecessary. If your monthly expenses exceeded your income, you absolutely have to cut down on the expense side, and these are the items where you should start. It's certainly nice to buy lots of beer and chocolates and toys for the kids, but when such items start eating up half of your budget you have to apply some restraint.

Your next step is therefore to examine all these expenses and see which ones are discretionary, in other words you don't really have to spend money on them every month. Other expenses, such as the mortgage bond repayment, should be market in red, because you have no choice in paying them.

You can most likely also cut down on your food bill. If you buy a lot of take-aways instead of cooking, you can no doubt save by simply preparing more meals at home. If your grocery bill regularly includes things such as ice-cream and other deserts, this is where to start looking when you are trying to save money.

Once you have trimmed down these expenses to reasonable levels, don't think that's the end of the story. You now have to make provision for things that have to be paid every few months or even yearly. Let's say you have a yearly insurance premium of 1200 USD. Then you have to include 100 USD in your monthly budget to make sure you will have that money at the end of the 12 month period. The same goes for expenses such as having the car serviced, the house painted etc. On top of that, have a column for unexpected expenses.

An excellent way to handle this type of expenditure is to actually physically draw the money at the end of each month and deposit it into a separate savings account. You will not only earn interest on these funds, but it will also be easier to control. If you leave it in your check account, things can easily become confusing and when the time comes to pay a bill you might find you spend the money on something else.

A budget that has been well planned will take a lot of stress from your life. Suddenly there will always be money for the things that must be paid at the end of every month. And there will surprisingly also be money for entertainment, because it's on the budget. And when the time comes for the car to be serviced, just look in your savings account - the money will be there.

by: Augustus Golden.

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