5 Tips for Creating a Household Budget that Works

5 Tips for Creating a Household Budget that Works

Anyone can create a household budget. However, to make one that works for you, you need to take a good hard look at your finances and your spending habits and consider ways to make your money go further.

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Budget that Works

Look at weekly, rather than monthly, spending

A month allows too much room for error when planning out a feasible budget. Instead, budget weekly for smaller items (groceries, eating out, gasoline), and only monthly for larger items and bills (electricity, water, mortgage). Errors in weekly budgeting can be caught and corrected quickly. This way, if you go over budget one week, you can be more mindful the following week.

Account for miscellaneous spending 

A well-prepared budget will have a section for both miscellaneous and emergency spending. Both accounts are available when necessary, and can be put into savings when unnecessary.

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Never count on extra money

Only expect to receive your family paychecks every month to make ends meet. Never budget for a tax refund, a rebate, or even birthday money. If you do receive money, you can plan for it accordingly. If you don’t and you’ve built it into your budget, you could wind up in over your head.

When in doubt, overestimate

If you must estimate spending money, err on the side of caution and overestimate. If you underestimate, you run the risk of going over your household budget. Do not readjust your budget until you see that you have overestimated for at least six months.

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Make and follow through with plans for leftover money

A budget is only as good as your plans for leftover money. The purpose of budgeting is not only to stay out of the red each month but, hopefully, to stay in the black and manage to save money. Whether you intend to save using a savings account, increase your retirement contributions, or invest in a mutual fund or the stock market, follow through with the plans you make. If you let extra money sit around in your budget, you are more likely to spend it. -womansday

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