Build a budget you can live with

One of the best ways to manage money is to create a budget. Not having one could mean the money is being spent on insignificant things, showing nothing in the long run. A budget doesn’t have to be complex to work with, especially if you’ve never created one before. Here are some steps you can use to create a family budget.

Calculation of total net income

The first thing you need to do to create a budget is figure out how much total money you are bringing in each month. This includes all the money you take home after taxes. It does not include any regular payroll deductions. If you are self-employed and earn varying amounts each month, calculate the average monthly income you receive.

Determination of monthly expenses

Then work on determining your monthly expenses. It is important that you understand where every penny goes. List all your bills and expenses, whether fixed or not. Include mortgage payments or rent, memberships, groceries, fast food purchases, car payments, insurance, transportation and everything else.

Create categories for these expenses. This will help you understand your fixed expenses and your discretionary or optional purchases. BetterMoneyHabits suggests writing down your expenses daily to make sure you don’t miss any. Do this for a month or two. You can record them on paper, with a budget app on your phone, or using a budget sheet. You can also find a list of the best budgeting tools on EpochTimes.

Assess where all of your discretionary income is going. If you no longer need to spend money on certain items, eliminate them. If you’re paying late fees on some of your bills, look to save money by paying all of your bills on time. To save more money, only use credit cards if you can pay the full amount each month.

Set financial goals

After understanding what your monthly needs are and what your Discretionary Income is, you will need to set some financial goals. You can set short and long term financial goals.

A short-term financial goal might be paying off your credit cards or saving for next year’s vacation. Your long-term financial goals may include putting more money into a retirement fund to ensure you have enough money for a comfortable retirement.

nerdwallet suggests that you use a 50-30-20 budget rule to create your budget. This rule encourages people to use only 50% of their monthly income for necessary expenses. Another 30% of your income could then be used for the things you want, and the remaining 20% ​​for savings and debt repayment.


Needs are the base: things you can’t live without. The first of these is usually rent or mortgage payments. Other needs typically include utilities, food, clothing, transportation, and insurance. “Need” expenses usually occur on a regular basis, whether monthly, annually, or less frequently.


Desires are non-essential and often for pleasure. They include restaurants, monthly subscriptions, travel and entertainment.

Charitable donations generally fall into this category. Although many consider this non-negotiable, the amount you donate can be flexible and determined by other expenses, putting charitable giving in this second-highest category.

If you examine your “wants” category, you may find that the things you consider “needs” are actually “wants”.

To save money

The last 20% of your disposable income should be split between debt repayment and savings.

Thinking long term is key when saving. It means saving money for retirement. Social security is rarely enough to live comfortably. It is intended only to supplement other income or savings after you retire. And today, more money is needed for retirement, because people are living longer than 30 to 50 years ago.

You may want to keep your money for savings, whether short-term or long-term, in a separate interest-bearing savings account.

Long-term savings often include a retirement plan such as a 401(k). Many employers with retirement plans can match your contributions up to a certain amount. Take advantage of this free money by making the maximum allowed contributions to your retirement account.

If your employer doesn’t offer retirement accounts or you’re self-employed, be sure to get one yourself. You might want to consider a solo 401(k) or an IRA. Silver lists several types of retirement accounts, with a brief explanation of each.

Savings also includes an emergency fund. Sooner or later, you will have unforeseen expenses, such as medical bills, car or house repairs. It’s a good idea to have at least $1,000 for emergencies and it should be readily available.

Finally, an important part of this category is debt repayment. To minimize your debt, learn to save money for more expensive items, rather than buying them on credit. Remember that everything you buy is cheaper if you don’t pay interest. Having less credit debt (less than 30% of available credit is recommended) could also help boost your credit score.

Make adjustments

After creating your budget, some adjustments will likely be necessary. You may have forgotten to add something or the amount you set for a category may not be enough.

There may also be additional, seasonal or occasional expenses that require spending more money from one category or another. This can include things you don’t buy regularly, like school expenses, new shoes, and medical needs.

To make sure your budget stays relevant, The bank rate suggests reviewing it every six months and adjusting it to meet new needs that may arise. If your budget becomes stale, it also becomes a useless tool to guide your spending and savings.

Control your expenses

After you create a budget, only you (and other people with access to your money) can control where the money goes. A budget is an ideal or a tool to help control where your money is going. Self-discipline will be in order to limit your purchases to what the family budget allows each month.

Once you’ve spent your allotted amount on extras, such as fast food and dining out, cut back on extra spending in that area until next month. Or take it to another discretionary area, but also stop spending in that area once that limit is reached.

You will always need to record your daily expenses to avoid overspending in any given area. Remember that whenever you spend too much in one area, it means having less to spend in another category.

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