Your Questions About How To Budget A Household

Lizzie asks…

How do I make a household budget?

We have been putting all of our purchases in a log, paying bills, and just using the rest to buy groceries. I want to start planning our spending before we spend it. I need a step-by-step method for budgeting a paycheck-to-paycheck household.

richmama answers:

You’re a step ahead of most people. By now, you have a good grasp of what you’re spending money on. Take a good hard look at how you’re spending your money. Some expenses are “fixed” – meaning they don’t vary each month. Some expenses are essential (food, gas, housing, etc), while others are not (morning latte, manicure, movie tickets, etc). Take a look at where you can cut back on those “wants” rather than “needs” and you’ll find that saving money is not that difficult.

Now set some goals for how much you’d like to save. Start each month by paying yourself, so to speak, and put money in your savings account in order to build a nest-egg. Some people find that having money automatically withdrawn from their paycheck is the easiest way to “force” them to save.

You may want to check out this cool calculator that can help you manage your budget: http://www.fuzeqna.com/smcu/consumer/kbdetail.asp?kbid=1929

You might want to use a software program such as Quicken to help manage your finances and goals. But the system isn’t as important as the action. You’re on your way!

Carol asks…

How do I approach my wife about setting up a household budget?

She avoids the idea of budget planning. I have tried to explain to her that she would actually save more money if we had a budget. She has about $1000.00 dollars of bills she is responsible for per month and brings home a net of $2500 per month but never is able to save any money. She has no credit cards but pays cash or debit card for everything. She’s not in debt. Just can’t save money.

richmama answers:

Get your hands on either Quicken or Microsoft Money, once you have it installed, show her how simple it is to keep track of what you spend, once she starts to keep track of the wasteful spending, then she will hopefully see for herself the importance and need for a budget. Fiscal responsibility is a learned behavior, it doesn’t happen in one day. Be patient with her. I have watched my wasteful spending shrink monthly since the day I started using Microsoft Money, it’s very easy and a super useful tool.

Nancy asks…

Any ideas on how to formulate a household budget?

I have tried for years to get my family on a budget but have been unsuccessful. ANy help or website info you guys can provide?

richmama answers:

First you need to know what your net income is. In case you don’t know what this is: Net income is the income after taxes (remember we have to pay Uncle Sam first) and other deductions.

You’ll also need to know the expenses you have per month.

I’ll give you a typical budget.

Example for a Monthly budget:

2500.00 Net Income

0850.00 Rent or Mortgage
0100.00 House insurance
0100.00 Gas
0050.00 Phone
0050.00 Electricity
0040.00 Cell phone
0250.00 Food
0100.00 Clothes

1540.00 Total expenses

0960.00 Balance

There are expenses that you cannot change. For instance, the rent or mortgage do not vary unless you move somewhere else or get a new mortgage.

Everything else on this budget can be changed.

If you see that you don’t have enough money to pay the rent, then don’t eat out that much, don’t buy those extra pair of sneakers just because they were beautiful.

In the above budget, you have 960.00 extra per month. You can choose to spend it all on beautiful sneakers. I would advise you to save some of it for a rainy day. After all, 950.00 on sneakers is pretty high. Don’t you think?

Besides, if you don’t own a house now, maybe you’ll want to save it for a house. I don’t know. Maybe you prefer to go on a vacation. My point is: DO NOT SPEND ALL YOUR MONEY UNLESS YOU HAVE TO. ONE DAY YOU MIGHT NEED IT.

Of course, your budget might differ from above. I did not take diapers for your toddlers into consideration. Neither did I take medical costs, babysitters, or entertainment into consideration.

I figure that this is enough for you to see how a budget works.

Remember, if your income is greater than your expenses, don’t spend what you have left on stupid things.

If your income is less than your expenses, you are in big trouble. Therefore, cut down on the expenses.

Keep in mind, however, that sometimes you need to spend money on stupid things. They nourish your soul.

Steven asks…

What is your annual household budget for Religion and related expenses?

instead of tossing cash freely into the collection plate each week, how about making a semi-annual contribution instead?

it’s time to think smarter and budget more wisely – and frivolous expenditures are the obvious place to start first

richmama answers:

I agree, frivolous expenditures are a good place to start, that’s why my household spends $0 on religion and related expenses.

I have real bills to pay.

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