Time to Create a Simple Household Budget 5 Easy Steps
With the gas and grocery prices skyrocketing right now, it is the perfect time to analyze your family budget. Usually when researching cutting expenses, the first thing you read is cutting out your morning Starbucks (or equivalent). If you are someone who gets your morning coffee on the go, you should really think about cutting back.
If, like me, that has never been an issue, keep reading for other ways to make cuts and achieve a simple household financial plan you and your family can stick to. Try our monthly household budget template, easily fillable before printing!
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How to Start a Family Budget
The first step in any process is to first see where you are so that you can make a plan to get where you want to be. So to begin with, determine what your net income is. Your income minus all your expenses.
In order to start saving money or create an emergency fund, you need to see what’s coming in and what you’re sending back out.
Analyzing the last six months of your bank statements is the best way to see how you’ve been spending your money. Print them off and use highlighters to mark income, fixed expenses (those that remain the same every month like your internet bill) and variable expenses which are the ones that fluctuate monthly. An example would be your heating and cooling bills.
Use a different color highlighter, I used pink, to mark all the unnecessary expenses. The ones that are going to be the easiest to reduce or eliminate altogether. Make a list of which ones you can completely eliminate, and list the next three that you will work on reducing.
If you need more insight into figuring out your personal finances, check this book out.
Questions to Ask about Home Budget
• What do we have for income?
• What do we hope to achieve with a budget – Goals?
• What are our expenses?
• Ways to increase income – side hustles?
Get Your Goals in Order
You need to have a goal when setting your budget. What do you want to accomplish beyond saving money? Do you want to buy a new house or vehicle? Get out of debt or save for you kids to go to college? Are you looking to retire early?
If you are married, or in a relationship make sure you both have the same goals. Finances are a major cause of divorce, so making sure you’re on the same page can prevent problems later on. Make sure your children are aware of the goals and teach them how to save money for things they want.
So, sit down as a family and look at the next year, next five and twenty years. Where do you want to be at those times? How much money will it take to be there? Once you have those numbers, you can figure out your budget, and make it happen.
The Key to Financial Planning
Knowing what ALL your monthly expenses and monthly income are crucial steps and is what your budget is about. Cutting expenses is determining how much you make and what you really can afford to spend each and every month.
Once you know how you currently spend your money, you can begin making educated cuts to the monthly expenses. Now you understand how your household financial plan looks, and the changes you need to make to it. You will find money to begin putting towards retirement. Or to finally open that savings account and tuck money away for later.
What about Monthly Income
Analyze your household budget regularly. Look at your monthly income. Identify any money that you haven’t assigned to home and the “essentials wants” each month. Any money on fast food simply because you didn’t feel like cooking. Both these examples are considered “leaks”. And we all know we need to plug these leaks to keep from sinking.
So you’ve been at the budget for a month and it just isn’t working like you’d hoped. It’s time to find the leaks in your budgeting attempts. Go over your bank statements and look at the expenses. When looking at each item ask yourself a few questions. Involve the family so you have a complete picture.
Questions to Ask about Monthly Expenses
We talk about making small changes, that’s because realistically, long-term you want to succeed. If you attempt to cut all frivolous costs at once you are setting yourself up to fail.
Don’t quit cold turkey, instead make the small changes you know you can stick to and adjust as you progress.
- Is this really necessary?
- Does this add to our lives?
- Can our budget afford it?
- Can we make do without it?
Don’t forget to look at fast food, video subscriptions, vacations, clubs and classes. And don’t forget to analyze non-cash expenses. Ones that you pay for with credit cards, CashApp or PayPal. By paying with these services, you may be hiding some of these leaks under the credit card category.
There are other areas you may not think of as leaks. These include utility bills, grocery bills and of course the most common…entertainment. You need to be conscious of where your money is going. Making the choices to spend every penny in a way that truly benefits your greater goal.
Save Money in Your Home Budget
There are several categories where you may feel you have no control over the monthly expense. Items like internet, cell phone and tablet bills, and streaming services. However, if you do a search you can find ways to cut or at least save money on these bills.
Such as using the bundle for Hulu where you can also have access to live TV in your area. Or looking into the internet companies in your area. If they are all fiber optic internet, look for the best deal. It may seem like a hassle to switch but the savings to your monthly budget will be worth it.
Cell phone companies, like Verizon, have discounts that can help cut your cell phone bill by a percentage each month. Don’t be afraid to ask your provider if they offer these discounts. They wouldn’t offer them if you weren’t allowed to use them!
There are even available discounts for utility bills. We just got a new smart thermostat and once we had it hooked up, an offer popped up that by using it we could save on our electric bill. By allowing the company to adjust our smart thermostat up or down by five degrees in high usage months, we could save. Really has helped us cut without doing anything, and you get the benefits just for being in the program even if they never make the adjustment.
How Meal Planning Helps Household Budget
Earlier I mentioned groceries as an expense leak in your budget. Begin planning meals, I know it sounds like another time suck in your day, but knowing what you plan to make drastically reduces the groceries you buy.
Sounds odd, but think about it. How often do you go into the store and pick out several items with just an idea of how you can create a meal? Then go through your cupboard and see how many of those items are still there? My family is guilty of this! Then we have to create a meal around those items.
Meal planning partnered with curbside pick-up or delivery, saves time and money. You won’t be inclined to grab items that you don’t need and run up your bill an extra $100. I was hesitant to use the curbside and delivery options, but they have really helped us out.
Planning meals and snacks and then having it show up at the door has opened up a lot of free time for my family. Allowing us to have more fun together. Add your budget and savings sheets as well as a meal plan sheet to your personal planner to keep organized and on track.
Family Fun on a Budget
Speaking of fun, make sure not to eliminate it just because of your budget. There are many great ways to have fun on a budget. You just have to find inexpensive ways to get it.
My boys loved doing a summer of parks. I researched the different city parks in our area and found that we have one with a free splash pad, and another that looks like a dinosaur dig. So every week we would visit another park.
Look around for free or inexpensive things you can do as a family and enjoy. Create a family date night, let everyone have a turn choosing. We spend so much money on family activities that we often lose focus on the family. Get back to enjoying your family life.
Adding to Your Income
Before the internet, adding to your income meant getting a second job. Sometimes it was as simple as yard care or delivering papers. However, today there are so many options on the internet that can help add a bit to your income every month. Here is a list of ones I have personally used when I was a single mom.
- Inbox Dollars save and earn by printing and using coupons. Upload store receipts, do surveys, watch videos, and yes play games. It really isn’t that difficult. You can make an additional $20 a month easily, sometimes more.
- Receipt Hog sign up with a Gmail account and connect it and earn for online purchases. Upload receipts and take the occasional survey.
- Caseys Rewards if you shop at Casey’s use this to add points which you can then trade in for gas savings. Also, if you order 10 pizzas, the 11th is free. Our boys love Casey’s pizza!
- Flex-Time Jobs – there are companies out there that offer flex-time work. Hyvee and Walmart have flex shoppers. You sign up to do shopping for those who shop online, you can pick your days and hours and get paid. Usually the requirement is to work for five hours in 3 months. So a very doable situation.
- DoorDash or Uber Eats Drivers – be a driver for food delivery. Again, you can pick when you’ll work. You get paid a small wage and get to keep all the tips you make.
- Write on Medium – If you like to write but don’t want to start a blog, write on Medium. It costs $5 a month. When other members read your articles you get paid. There are some who easily make a few hundred a month doing this.
Breakdown of the Budget Plan
So the five steps to cover in your budget are simple.
- Define your goals
- Determine Monthly Income
- Find all Monthly Expenses
- Find the “leaks” and make adjustments
- Live inside your budget and enjoy financial freedom
Managing your money and creating, living on a budget can seem daunting. However, it’s worth the initial pain to set yourself up for financial security. Your budget isa wonderful tool to get you to your desired future!
Download our Free budget worksheet and savings sheet, add them to your planner and take a step towards financial independence. Let us know in the comments how your budgeting is going.
