NDSU Extension Service - Ramsey County

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Where Do I Go From Here?

Where Do I Go From Here?

The average American family has $3,800 in the bank and $2,200 in credit card debt. Furthermore, 25 percent of households have no savings whatsoever and only 18 percent are very confident about their retirement situation. Despite these bleak statistics, there are plenty of ways families can improve their financial situation.


Setting up a family budget is an important first step. The more organized you can be, the better you can control spending so you will have enough for family vacations, retirement, college funds and emergencies.

Your first step is to gather three months of pay stubs for you and your spouse, 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.

Next is to collect your monthly bills. The best bet would be to collect your bills from the past three months so you can anticipate increases. You want to get 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, divide by three.

Now you are ready to look at your monthly earnings against your expenses. You have now determined what your budget is based on the expenses you currently have. However, you don't want to stop there.  . It's now time to look at where you can cut back so that you will have more for savings.  Also, 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).

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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