Budgeting Plan

The need to establish a family budget is not limited to tough economic times; it is the foundation for creating a path leading to financial stability and prosperity. The concept of preparing a budget may appear to be an overwhelming task, but is actually quite simple.

How to Create a Household Budget

• It is best to select a spreadsheet, or any other method or program that allows you to track actual expenses automatically and to group your record of spending by category, comparing the actual expenses to the budget figures. This will assist you in identifying the patterns or reasons for discrepancies.

• There are easy money management software tools and sample budgets on line including inexpensive and free downloads offered by QuickenOnline and others, including some that provide record keeping, and track your spending automatically.

• When preparing your family budget, it is best to start with the essential monthly expenses before allocating limits to discretionary expenses.

• Expenses of discretionary nature in particular play a vital role the financial stability of a family, and those should be tracked closely by saving receipts and comparing the expenses to the monthly budget in short intervals.

• The ability to limit discretionary expenses to the budgetary figures is generally crucial to the goal to live within an established family budget.

• The use of credit cards should be limited to convenience only, not to augment (or plug in) over spending habits.

• An example of a typical family expense budget may include in order of priority

1. Housing (related to rent or mortgage)
2. Utilities
3. Food and clothing
4. Medical
5. Transportation (car payment, insurance, gas, repairs)
6. Telephone
7. Secured debt (other than housing and car)
8. Credit Card payment

Creating Savings

A budget is the first step in creating a family path for financial stability; however, it is equally important to create spending disciplines. Along with defining the perimeters for your budgetary spending, certain disciplines need to be implemented in order for the budget to be meaningful.

• The intent of creating a budget is to create a blue print for spending limits, as well as a threshold for savings.

• When setting saving goals, it imperative to create an emergency fund with the goal to reach within a time limit, a certain sum, generally six months of living expenses.

• For a family with children, a college fund in a separate college savings account in most cases will enjoy tax advantages.

• Additionally, contributions to regular IRA and Roth IRA’s accounts, as well as investment accounts would help reach other future financial goals.

Identity Theft

Identity theft has become a real threat to our financial welfare and to our lives in general. It could mean the loss of your credit, your money and finances, and even school and medical records.

There are many identity theft protection companies that offer identity theft protection. Additionally, there are steps that an individual can take to avoid becoming victims of credit theft by FREEZING your credit reports. You can freeze your credit by contacting each credit agency: Equifax, Experian and TansUnion, and making the request and paying a nominal fee. The only down side is that before you make an application for credit you would have to request to THAW your credit reports, which may take a few weeks.

Getting financial expertise

If you are unable to meet your financial needs and would like assistance in eliminating or reducing your monthly expenses, you could benefit from consulting with a professional financial planner who would be able to identify the best path or service personally tailored to your specific needs.