Taking Charge of Family Finances Family Money Manager (FE222 (Revised))

Money is an often-discussed topic in most families, usually centering on, “Where did it go?” More money usually is not the answer for solving financial concerns for most families. Instead, developing a plan for better money management will help most families feel more satisfied with their income and their progress toward goals.

Reviewed by Lori Scharmer, Family Economics Specialist

Family Goals

Effective money management depends on the way a family chooses to live and the goals it plans to achieve. Think about where your family is today financially and where you would like to be in five or 10 years.

Long-term goals — These “dreams for the future” usually are set for more than five years.

Intermediate goals — Usually these objectives would be attainable within one to five years.

Short-term goals — These goals are attainable in the next three months to a year.

Each goal you choose should have a specific dollar amount assigned to it to help make it a reality. The first goal for many families will be to set up an emergency fund. An emergency fund usually is living expenses for three to six months, to be used in case of an interruption in income. (See Chart 1: Goal-setting Worksheet.)

Goal setting worksheet

Getting Started

Taking a moment to assess the situation is important. The charts included in this section of “Family Money Manager” will help you determine income resources and your expenses. Look at Chart 2: Income Forecast. What is your anticipated monthly income? This is the amount you will be using to plan your cash flow.

Income Forecast

For some families, taking a good look at their income and seeing where the money actually is spent is enough to help them regain financial control. But others need additional help in the form of a money management program or a few visits with a professional financial counselor who can provide help with better money management. Financial counseling is available through a variety of nonprofit services (consumer credit counseling) and military family support programs.

Planning to Spend and Save

Many families set goals and have dreams for the future. Taking charge of spending means knowing how much is being spent and on what items. A good recordkeeping system can make all the difference in making your spending plan a success. You might want to consider the following methods to achieve a realistic idea of how your money is being spent:

Tracking sheet — Write down your daily spending for a two-week period. On a sheet of paper, write the categories you need to track. Track categories that vary in amounts from week to week or month to month. (You do not need categories such as mortgage or car payment. Suggestion: Make the first four categories food, eating out, snacking out and personal care). Numerous forms, workbooks and even computer programs are available to assist in this method.

Check register tracking system — Record each expense immediately, and keep the balance up to date in a checkbook register. You can use the register to record checks, cash and credit expenses. For information on this system, see NDSU Extension Service publication HE-470, “Taking Charge of Family Finances: Using a Check Register to Track Your Expenses”.

Calendar system — Use a calendar to track your monthly cash flow. Begin on the first day by writing down cash on hand or the balance in your checking account. Write your paycheck amounts on the appropriate dates. Then write down when bills need to be paid or when you need to spend money for food, gasoline, school, etc. You will list the amount of your income and the bills so you can add and subtract as your progress. Continue this process through the month to see if you can cash flow.

Envelope system — This cash system lets each family member see how much money is available in each envelope or budget category. It requires little paperwork because the expenses simply are recorded in the envelope. Receipts also may be kept in the envelopes. The disadvantage of this system is that it requires keeping larger amounts of cash around the house, which may cause a security problem.

Whatever method you use to track your spending, you will need two to three months of records to come up with a projected spending plan. On Chart 3: Spending Plan Worksheet, list your current expenditures in the current monthly column.

Spending Plan Worksheet

Living Expenses

Living Expenses Cont

Debt repayment summary

Review the Plan

Now fill out the summary on the last page. Do your current expenses match your projected income? If not, you need to adjust your spending, find new sources of income or both. If you have problems balancing your income and expenses, you may find that talking to a financial counselor is useful. Look in your local yellow pages under “credit and debt counseling” or contact your local Extension office for services available in your area.

Any spending plan will need to be revised and restructured as your family’s needs change. By regularly reviewing your family budget, you’ll be able to compare actual amounts with the planned amounts. The more frequently you make such checks, the better your progress will be in reaching short- and long-term goals.

Additional Resources Available

The following resources are available from your local office of the NDSU Extension Service to assist in your family money management:

FE-222a Financial Term Guide will help you understand various financial terms.

FE-222b Spending Forecast can help you look at all your regular and irregular expenses on an annual basis.

FE-222c Family Balance Sheet can help you take an overall look at your family’s assets and liabilities. This sheet should be filled out on an annual basis.

Reviewed and reprinted May 2013


Creative Commons License
Feel free to use and share this content, but please do so under the conditions of our Creative Commons license and our Rules for Use. Thanks.