Creating A Home Budget

By: Glenn Lawrence Selig

Who Needs a Home Budget?

Fortune 500 companies have budgets. Mom and pop businesses have budgets. Every family ought to have a home budget.

A home budget lets you truly know whether you can afford a purchase. There's a lot of temptation to charge unneeded purchases on credit cards even when you can't afford them. But a home budget will help you keep your perspective in check.

Whether you have a large paycheck or a modest one, a home budget helps you live within your means.

How to Design a Home Budget

The hardest part of designing a home budget is getting started. You'll need to seriously think about how you and your family spend money.

It's important you be honest when creating your home budget. Otherwise, it'll be nothing more than a waste of time.

You'll need to consider the major expenditures: Rent/Mortgage, auto payment, gasoline, groceries, insurance, etc. Go through your checkbook and your credit card statements. The big stuff is easy to figure out. It's the small stuff that's a bit tougher.

How to Determine Expenditures in Your Home Budget

Start from the beginning of the day, and keep a log of where you spend your money. And do it for a month. Do you start your day with a coffee or latte at a gourmet coffee shop? Make sure to include that in your home budget.

You'll be shocked at how a dollar here, and a dollar there really adds up. Just think, $4.00 a day on gourmet coffee adds $120 to your home budget! That's a third of a car payment.

Don't forget the three most common categories overlooked. Most forget debt reduction. That's the money that's going to pay down your credit card or other debt. And though many have a 401K plan, you'll be surprised how people forget to jot down that they're contributing sometimes hundreds of dollars a month to a retirement savings account. And what about the money you're setting aside for an emergency? Include that in your home budget too.

The Hardest Part of the Home Budget

You already knew what you were bringing home every month in your paycheck. Once you get all your expenditures together, you'll see where your money is going.

If you're spending more than you're making, or you're not saving enough, it's time to start cutting. Nobody said this would be easy!.

Glenn Lawrence Selig publishes Focusing on family and finance, is the #1 parenting magazine for fathers, with articles on finance, saving money, family fun and stuff just for dads! For more articles on home budgeting, visit the section on personal finance.

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