Having a monthly budget set in place is a way for you to better manage your finances without worrying or stressing over bills you receive regularly. The more actively you get involved with managing your household’s budget, the easier it is to keep yourself afloat financially regardless of the income you generate throughout your entire family. Making a monthly budget you can stick to simply requires a bit of time and a commitment to handling your finances with more self-control and awareness.
Organize Your Expenses
Before you can make an actual monthly budget for your household it is essential to begin organizing your expenses. Gather all of the monthly bills you have to pay or create a list of your own with the estimated cost of each expense you have. Whether 
you have a rent or a mortgage payment, cell phone bill, car insurance or medical payments you must make, it is important to track as many expenses as possible to create a budget that is accurate. The best way to do this is to take your bank statements from last month and track and categorize every single expense that you paid. You can use a tool like Quicken, or use an online only site like Mint.com to help you with this task. Make sure to categorize your food, utilities, credit card payments, loans of any kind, gasoline and insurance.
Determine Essentials Versus Luxuries
Once you have organized all of your household’s expenses it is important to determine which bills are essentials and necessities versus luxuries and items you simply desire throughout the month. Determining which of your bills are essential versus luxuries is a way to quickly gain more perspective on whether you should continue to pay for additional services and luxuries throughout the month. Be honest in this process. Is getting your nails done or buying the latest and greatest gym clothing an essential or a luxury?
Cut Back on Expenses
Cut back on some of the expenses you have in your home by eliminating luxury bills such as cable TV, faster Internet speeds or even games and subscriptions that come along with your mobile phone or other tablet device. The more you cut back on unnecessary expenses, the easier it is to feel less overwhelmed when it comes time to pay for your essential bills such as a mortgage payment, electric bill or even a bill for your water. Look at things like your gym membership, magazine subscriptions, and other monthly obligations as things you can consider eliminating. Of course, if you use the gym regularly you will likely want to keep this expense as your health is ultimately more important than saving a few bucks each month.
Estimate What You Spend Compared to Your Income
It is important to estimate what you are spending throughout each month compared to the income you are generating. Estimating your expenses before actually calculating them can be quite eye-opening and help you to take even more control over your own finances. Your goal for using Quicken or other tool will be to have an exact accounting of all of your expenses versus what you are actually bringing in for income. Are you running a negative balance each month and living on credit? You can only answer this by tracking your monthly inflows and outflows of cash.
Be Realistic And Include A Slush Fund For Unexpected Expenses
The number one budget buster will be paying for items that you didn’t see coming. Own a home? You will likely need a new roof every 15 to 20 years and a new water heater every 8 to 12 years. Own a car? You are going to need tires every 30 to 40,000 miles, and will of course need the occasional brake job or other maintenance item. Have children? What are the chances they might need braces, sports equipment, or school supplies? In other words, they are some things that you will likely need in your lifetime but you don’t necessarily account for them in your monthly budget. The answer? You need to account for them in some way. The best way to do this would be to set aside an amount of money per month that will cover unexpected expenses. Only you can decide what that dollar amount will be, but $200.00 a month is a good figure to start with.
Revisit Your Budget Monthly When Starting Out
Your monthly budget won’t be set in stone when you are just getting started. This will be a work in progress so go easy on yourself. You likely won’t get your budget sorted out for at least a few months. So, it is extremely important that you revisit your budget on a monthly basis. What did you do right? What expenses did you leave out? Does anything need to be adjusted or reallocated? Doing this on a monthly basis will ensure that you get your budget nailed down. After you have been doing this for 9 to 12 months you will find that you will need fewer tweaks. When you reach this point of your family budgeting, you will know you are on the right track.
Use Online Tools To Help The Budgeting Process
Perhaps the easiest way to keep your budget on track is to use online tools. There are several free services like Mint.com and Personal Capital that can help. For budgeting, we recommend using Mint and you can read our complete review of that service when it comes to monthly budgets. For net worth and investment tracking, we found Personal Capital to be the better choice. Whichever tool or service you use, it will likely make your budgeting process a whole lot easier to manage.
Making a monthly budget is a way for you to gain perspective on the income you are currently generating as well as the overall expenses you have as a household. The more aware you are of the expenses you have versus the amount of money you are generating, the more likely you are to make wise decisions when it comes to spending or saving the money you have earned.
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