Today, we have a guest post from a Russell Fay. He is a family man who practices and preaches frugal money management, smart spending, and personal investment.

It’s common knowledge that a well-crafted and maintained budget can help reduce a household’s monthly expenses, but the question remains – how do you actually do it? Plugging your numbers into a budgeting website is relatively self-explanatory, but then what do you do? A good budget is an organic thing. It covers every detail and it shifts and evolves as time passes and expenses are added and taken away. Here are five ways to craft a budget that really works for you and your family.

1. Make Your Goals Attainable
You can never achieve your financial goals if they aren’t realistic. If you’ve got $30,000 of credit card debt, you’re going to need more than a year or two to realistically climb out of it. If you don’t have an emergency fund, it’s unlikely that you can build up 12 months’ worth of living expenses in 2014 either. Whatever your goals are, make them attainable. If you’re behind on retirement savings, commit to setting aside $100 each month in a separate account to be deposited in a Roth IRA at the end of the year. Once you achieve that goal, you can even automate your monthly contributions.

2. Include Everything
If you’re a traditionalist, write your budget on a sheet of paper. Or, use an Excel spreadsheet or an online resource such as Mint or My Spending Plan. Regardless of what method you choose, just make sure your budget is comprehensive. For example, you know you’ll be spending extra around the holidays, so include a prorated amount each month for holiday gifts. You should also include lines for auto insurance, property taxes, even your summer vacations.

3. Put It to Good Use
If you take the time to create a family budget but don’t do anything with it going forward, it’s an exercise in futility. Each and every month, compare how you did in individual spending categories so you can make better purchasing choices going forward. If you blow your monthly entertainment budget because you hosted out-of-town guests, commit to tapering your spending the following month by reducing trips to restaurants and staying home and renting movies or playing board games instead.

4. Revise Your Budget
Whenever a bill rises in cost, whether because of a rate hike or a necessary increase in spending, revisit your budget and make the appropriate adjustments. If your food budget goes up because you just had a child, get an idea of what you’re now spending so you know how much you need to cut back in other areas. Then, look for ways to offset the increase, such as clipping coupons to save on groceries or dropping your home telephone service.

5. Involve Your Children
Since raising children is not an inexpensive proposition, asking for their input, especially if they’re older, can benefit you greatly. If they’re more Internet-savvy than you are, they might be able to suggest ways to save money online that you weren’t aware of. For example, my son loves to play ice hockey. When he needs a new piece of equipment, he does his own research to come up with the best price. He even showed me a few hockey equipment websites with excellent prices that I never knew existed.

Final Thoughts
Once your budget is in place, it’s time to take a step back and think of additional upcoming expenses you might want to start preparing for now. Even if your kids are still in grade school, it wouldn’t hurt to start setting aside for college. A 529 plan is one of the best ways to do so. If you’ve never taken the time to figure out where you are with your retirement investing, take a look at that and find a way to bump up your contributions, if necessary. Creating a budget that works for your family is a great way to save on monthly expenses, just make sure you also look at things from a long-term perspective.

What ways can you think of to create a better budget for a family?

©2016-2020 Ellie Kay


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