How Do I Start a Family Budget?

A budget can help your family reach its financial goals.

A budget can help your family reach its financial goals.

Whether you're trying to get spending under control, pay down your debt or just manage your money better, a family budget can help you make the most of your income. Though budgets have a bad reputation as cheapskate spending plans, a family budget is actually a practical way to ensure your family has the things it wants as well as the things it needs, explains Kiplinger magazine. The key is to involve the whole family so that your budget lets you work toward shared goals.

Determine your monthly income. Add up the amount of money your family receives from paychecks, stocks, child support and other sources each month. If you know your income fluctuates from month to month, collect three months' worth of income records and use the average as your monthly income for your budget.

Figure out your fixed costs -- the amount of money you have to pay every month. Include monthly costs, like your mortgage or rent payments, car payments and utility costs, as well as annual or semi-annual payments like insurance premiums.

Subtract your monthly fixed costs from your monthly income to get your discretionary income -- the amount of money you have each month to spend on variable costs, like groceries, transportation, entertainment and gifts.

Make note of major annual expenses, like holiday gifts, school tuition or family vacations, and figure out how much money you need to save each month to pay for those expenses. Set up separate savings accounts, and transfer money into them each month, recommends columnist Jeff D. Opdyke in The Wall Street Journal. Otherwise, you'll be likely to spend that cash on other things.

Divvy up your remaining discretionary dollars on a monthly basis. You may need to spend more money on clothes and less on groceries when you do your annual back-to-school shopping in August, and you may want to increase your entertainment budget during the summer to pay for day camp, so it's more effective to manage your discretionary spending each month than to try to plan for the year, Opdyke says.


  • If you're looking to save money, your monthly discretionary spending is the place to start, recommends Look for money that's going to things you don't use, like unread magazines, unused gym memberships or unwatched cable channels. Eat at home or pack lunches instead of eating out, and try clipping coupons or planning your menus around sales to save money at the grocery store. Carpooling or using public transportation may also help you save cash each month.

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