Money on your mind – the budget

writingcheckThis year it seems everyone has money on their minds. In order to make the most of yours, a spending plan will help you pay the bills and realize your goals. How do you start? Here’s some steps to take to begin. Realize that it’s a plan and if you don’t follow it the first time, keep trying till you succeed. In the end, you will be glad you did.

Here are some other tips to make managing money in your home a little easier:

  1. Choose a chief money manager. Make decisions as a family, but it’s usually more efficient if one person sees that the bills get paid and handles the day-to-day records. You may want to rotate or trade off this responsibility so that both you and your spouse are knowledgeable of the budget.
  2. Develop a record keeping system. Where are your canceled checks, receipts, insurance policies, tax records, warranties and other important papers? This would be a good snow day project.
  3. Develop an effective bill paying system. You can clip bills to your calendar and write due dates on it or use an envelope system to sort out cash set aside for each expense. Develop and use a system that works for you.
  4. Develop a SAFE system for handling money. Checking and savings accounts can help here. Keep your checkbook balanced and store your cash in a safe place.
  5. Use credit wisely. A rule of thumb is that non-mortgage credit payments should take up no more than 20 percent of your take-home pay. 10-15 percent is even better. Remember that credit is ‘tomorrow money’ used today but must be repaid from future income.
  6. Establish a spending plan that includes all family members. Children are eager to learn, and checkbook balancing, record keeping, shopping and other activities help them understand the demands on family income. Use your own judgment, but as they are able to comprehend where the money goes, they are learning about choices and challenges to meet the needs first, then the wants.

Hopefully many of you have a household budget and follow it. This is not just recording what you spend, but an actual allocation that keeps track of the total picture. Consumer Credit Counseling shares with us the percentages of our income to our expenses. These percentage figures are based on NET INCOME and are suggested limits for each category. Take a look and see how your budget compares:

  • Housing (rent, minor repairs, property taxes and insurance) 20-35%
  • Utilities (gas, electricity, water, sewer, trash removal, telephone, cable) 6-10%
  • Food (groceries, meals out, pet food) 15-30%
  • Family Necessities (laundry, health and beauty items) 2-4%
  • Medical (prescriptions, doctor, dentist, hospital) 2-8%
  • Life Insurance 2-5%
  • Clothing (purchases, alterations and repairs) 3-10%
  • Vehicle/transportation (payments, gas, maintenance, insurance and repairs) 6-20%
  • Saving/ Investments 5-10%
  • Church/Charity 2-10%
  • Discretionary Items/Activities (credit cards, club dues, hobbies, entertainment) 15-20%

In order to set and follow a budget, everyone needs to work together! Start your family on the road to sensible spending today.