The goal of making a family budget based on your income is to teach yourself and the rest of your family to spend wisely. You may have other goals in mind like building a healthy savings account, saving for a vacation or paying off some of your debt. Regardless of the goal, it is easier to make your family budget based on the income you already have rather than finding more ways to make additional income. Although additional income is always great, it does not help you to control your spending habits.
Calculate the amount of income you have coming in from all sources. Include all parties involved in household financial responsibilities. Also include net income from employers, bonuses, child support payments and any interest that you are paid from investments.
List all of the fixed monthly, quarterly and yearly bills and subtract them from your income. These are bills that are the same each month and that are necessary expenses you cannot do without. This includes your mortgage or rent, the minimum payments on your credit cards, your car payments and insurance. Quarterly bills may include any premium payments for insurance, while annual bills may include the cost of tuition and property taxes. The quarterly and annual bills should then be divided so that they are equally spread over all 12 months; this allows you to know how much you need to save each month to take care of these expenses when the time comes.
Write down your variable expenses and subtract them from your income. These include any payments that you make for your credit cards that are above the minimum payment, toiletries, groceries, fuel, clothing, entertainment and utilities. All other expenses should be estimated, including gifts for birthdays and other holidays.
Subtract the amount of money you are spending from the amount that you are bringing in. You should be making more money than you are spending; if this is not the case, make adjustments and decrease or eliminate the items and activities that are unnecessary. The first step is to look at your variable expenses to make adjustments. Ideally, your necessary expenditures should not exceed 60 percent of your income.
Items you will need
- Bank and statements
- Jupiterimages/Comstock/Getty Images