In our busy lives of children and jobs, social commitments and family obligations, we sometimes neglect running the household. Maintaining a household is much like managing a business. There are bills to be paid, goods and services to be obtained and monitored and people who require supervision andcompensation.
Businesses have budgets and projections on how the revenue and outlay will be managed. This keeps the focus on the profitability of the business and allows it to grow. A household budget can also help a family in much the same way. When seen in black and white, the financial picture of a family comes into clear focus. A budget helps to pinpoint strengths and weaknesses, and this allows for planning growth and expenditures with knowledge rather than an impulse.
How To Get Started
Compile a list of all bills and expenses for one month. Include everything, not just bills that have invoices, such as utilities and credit cards, but casual expenses as well. That $5 for coffee and a donut or the $10 for a Saturday kid’s film all go on the list.
Gather all pay stubs and receipts for earned income. If your income varies, you will need to look at this over a longer period so you can come up with a reasonable average monthly income.
Get It Down In Writing
Sort all your expenses into categories. You will have categories for housing, debts, food, transportation, family, personal and health, education, entertainment and miscellaneous expenses.
Write out the categories and list underneath each category the specific bill. Utilities are listed under Housing, credit card payments are listed under Debts. Transportation will include car payments, gas and public transportation, for example.
Quarterly, semi-annual and annual expenses such as car insurance, charitable and political contributions are divided into monthly amounts and added to the list.
Make three columns, which include budget, actual and difference. This allows you to see what you want to spend, what you need to spend, and whether this is a category for concern.
Do The Math To See Where The Money Really Goes
Fill out your household budget worksheet at the end of each month. After a few months, you will see exactly where your money is going and how accurate your estimate figures are. Re-evaluate the numbers and raise or lower them to keep the budget on track.
If there is a large amount of miscellaneous, unaccounted cash, this could be a cause for concern. Cash just seems to slip away without so much as a squeak. Stopping at the ATM for a $20 withdrawal every few days can seriously undermine your attempt to track your expenditures accurately. This can be a big drain on your bank account and be a deterrent in debt reduction.
Make Realistic, Honest Decisions
If your figures show that you are spending more than you earn, use the spreadsheet to evaluate where your problem areas lie. If dining out and entertainment are big offenders, make a concerted effort to change your spending habits in that category.
Spend part of your dining out money on groceries and eat at home more often. Rent a DVD and pop a batch of gourmet popcorn instead of taking the family to a movie theater. Have friends in for an evening of music and a few drinks instead of meeting at a nightclub.
If the personal category is high, look at where the money is spent in that area. Clothing, hair care, nails and beauty salon visits are all non-essentials. A temporary moratorium on new clothes, tanning or gym fees can be a big money savings strategy.
Look at your subscriptions to services such as cable TV, Internet service provider and cell phone. There are ways to cut back on these expenses without giving them up. Opt for fewer television channels, a slower Internet speed or fewer phone minutes as ways to save money without relinquishing an entertaining or necessary service.
Debt Payments And The Household Budget
When looking at the debt payment category of your budget, you may find that you have multiple credit cards. When credit was easy, people acquired multiple cards and juggled them. Now that credit is tight, people continue to retain those cards, but find paying on each one is a significant deterrent in reducing debt.
Consolidating those credit card debts into one sum can significantly reduce the monthly payment. The settlement amount can have a lower interest rate and the payment far less than the accrued total of the current, individual accounts.
Call today to talk to one of our dedicated credit relief professionals and learn how debt consolidation can get your household budget on the right track. Keep your budget in the black and your focus on financial growth and security, with a debt consolidation program structured to fit your needs.