NDSU Extension Service - Ramsey County

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A Budget for Any Family

A Budget for any Family

Setting up a family budget is something that all families should consider. The more organized you can be, the better you can control spending so you will have enough for day-to-day living plus family vacations, retirement, college funds and emergencies. Where do you start? How do you know what to set aside and what to spend?

Gather Your Pay Stubs. Your first step is to gather three months of pay stubs for you and your spouse or significant other, as well as any other monthly earnings. This way, you can determine any fluctuations in pay from month to month and average out your total monthly income (add the three months and divide by three) without guessing on the numbers - you definitely don't need any surprises when setting up a budget. If your income has a wide range, you may wish to expand to six or even twelve months for a more accurate picture.

Collect Monthly Bills. Your next step is to collect your monthly bills. You want to record your fixed expenses, including rent/mortgage, phone bill, car payments, groceries, clothing, laundry, credit card payments, gym memberships and other monthly payments/obligations. After you add them up, again divide by three. And as with your income, if expenses range greatly, expand to six or twelve months.

Compare and Conquer.  How do your two totals – one for income and one for expenses – compare?  Any dollars left over?  A great shortfall?  This is the time to look at where you can cut back so that your budget has a positive balance and so you will have more for savings.

Set up Those Special Accounts. You want to use this as an opportunity to set savings goals that you should meet each month (a dollar amount that you must save). Once you've set your plan into action, you have to act on it. This means you need to open a savings account, buy some CDs, and/or set up an IRA and begin making deposits.

Continue to Track Your Expenses. After you've gone through all of this trouble, you don't want the work to go to waste. So it's important to track your spending each month to make sure you're actually saving as much as you set in your goals. If you feel you're swaying off course, it's time to rework your budget to determine how you can reach your goal.

When you make a budget, it may be tempting to go at it alone, especially if you're the person who manages the bills. But it's important to include the family in this process so they understand exactly why some expenses will need to be cut back, as well as why this decision is being made in the first place (savings for family vacations, college, etc.).

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