Household Budgeting. Step by step guide to successful family budgeting and home budgeting. Follow this budgeting process, and make budgeting work for your family!
The Budgeting Process
Family Budgeting Step 1
Understand income – know where income comes from, when and how regularly
Family Budgeting Step 2
Understand expenses – know exactly where your money is going to – record the dates and the exact amounts spent as well
Family Budgeting Step 3
Set goals – Determine your long-term financial goals, and also set short-term financial goals for occasional expenses such as holidays and big-ticket purchases
Family Budgeting Step 4
Understand your financial habits – understand how you and your family members handle money and communicate with one another; family dynamics are crucial for successful budgeting
Family Budgeting Step 5
Savings and spending mechanisms – The best way to save is to make it automatic – automatic savings accounts, automatic retirement plans, direct deposit, and so on
Home Budgeting Step 6
Plan your income – Build detailed financial plans, both by month and by year
Home Budgeting Step 7
Plan necessities – Estimate spending on variable but fixed monthly expenses such as utilities.
Home Budgeting Step 8
Plan family allowance – Set aside an amount for activities related to the entire family: outings and trips together, home improvement projects, and so on.
Home Budgeting Step 9
Balance and adjust – Evaluate your monthly income and expenses – how are you doing? Have you been able to budget enough for each month? Adjust your family expenses and allowances each month accordingly for the next month.
(An excellent except from The Pocket Idoit’s Guide to Living on a Budget)
This is the budgeting process in short. That said, savings are also extremely important. A portion of your household budget should be allocated to your family savings.
As stated in the classic The Richest Man in Babylon, “Gold cometh gladly and in increasing quantities to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family”.