Every household should have an active budget that is adjusted as financial needs change. Whether you are living on one income or multiple household incomes, whether you make thousands or millions, it really doesn’t matter. A budget is necessary to ensure that however much money you earn is allowing you to also save some for a future date. Today I wanted to share a few easy to follow budget setting tips so that you and your family can rest easy knowing that your income meets your needs.
This first step is the absolutely necessary first step to ensure you are able to create a budget. This part of the budget setting process will be difficult and can get ugly at times. You will work to put all expenses out there on the table. Personal, bills and business expenses will all be taken into consideration as you work to list out where the income is going. Make lists of items based on categories such as food, extras, wants, needs, utilities, etc. This will help you with the next few steps in setting a budget.
Evaluate Net Income
The next step to complete the process of setting up a budget without stress is to evaluate net income. This is the amount of money that actually comes back into the house after taxes or anything else that may be withheld from the paychecks. Make sure that every member of the household who is responsible for bills is a part of this evaluation. You will need an accurate net income number to ensure you can set a realistic budget for the entire household.
Make a Commitment
Now that you know what expenses and net income are, make a commitment to change. Take into consideration the wants and extras that you put into a list on step one. Make a commitment to yourself and your household that you will not spend money on those items. There is no reason to get into arguments here with your partner, simply make a commitment that each of you will be more cautious about spending money on unnecessary things.
Evaluate Monthly Bills
Make a list of your weekly, monthly and annual bills. This must include every expense that is considered a bill. Don’t forget about the car insurance, the car payment, the dumpster bill or any other item that may seem small. Those little bills all need to be taken into consideration as part of the necessary expenses per month for the household. Subtract your monthly bills from the net income, see if you have any room with money afterward.
Make a Plan
Make a plan to ensure that the expenses will be reduced and make a visual chart that will assign a specific amount of money each week towards bills. If you have a visual post board of your budget so that everyone who is responsible for bills can see it, then the chances of creating a successful budget for your household will increase. If the income and bills don’t match up properly, meaning you are short on cash after considering the necessary bills, see if you can’t reduce those necessary bills so that your income truly can meet the needs of the household. As you work these steps into your day to day life and keep that visual reminder of the household budget up in plain sight, you will soon see that bills are paid in a timely fashion and everyone feels less stressed in the household.