Making a Family Budget
By Martin Lenkowsky / March 1, 2014
It's a timeless saying: the only things guaranteed in life are death and taxes. However, another word should have been added long ago: bills.
Bills, bills, and more bills; each of us gets too many of them to count in any given month. For that reason, many of us find ourselves in financial difficulty for failing to plan ahead and budget. In fact, a resolution to budget one's money is often on the top of New Year's resolutions.
Though preparing and adhering to a family budget may seem daunting, it is not all that complicated. All one needs to start off making a monthly budget is a note pad with columns, explains Boca Raton accountant and financial advisor Mark King.
He said the first step is to list all your sources of net (after taxes and other deductions) income. "Convert that to a monthly figure," he said. That should go into your first column. For example, if your net pay is $500 a week, your monthly income would be $2,000 dollars.
The next step is to list all your monthly expenses, like rent, insurance, and car payments, transportation costs, phone and electric bills, among other things. King recommends we figure how much we spend weekly on items, such as groceries, and multiply that figure by four to give us a monthly estimate. He said to list all expenses, including health care costs and co-payments. "Also include a miscellaneous category for those extra unexpected expenses," he said, "like car repairs."
After jotting down one's monthly expenses, compare the figures to your net income. "Your expenses must not be more than the money you take home," he said, adding you might need to adjust some of your expenses. For instance, you might be spending too much on food, he said.
It's sometimes easier said than done, but King emphasizes we should all include a monthly expense budget for savings. "It is hoped you can save ten percent of your income every month," he added.
Setting aside money for savings is necessary, should some major unforeseen expense arise, King said. "You have to save money for that rainy day," he said.
King said to carefully review all your other monthly expenses. He said if you realize you're spending too much on some things, like entertainment and dining out, you should make the necessary adjustments. If your monthly cell phone bill seems to be too high, "maybe there's a better company out there for you," he said.
He also said if one's auto insurance premiums seem too high, "shop around for another policy." One must consider all possible expenses when planning a monthly budget. "You have to budget for everything," he said.
If you are having trouble setting up a family budget, you should seek the help of an accountant.
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