Wonder where your money goes? A family budget that works.

It’s a new year. Time for resolutions. Many of those will have to do with money: making more, spending less, using wisely. Starting with a family budget. If you’ve never actually created a budget, and then really tried to stick to it, here are some tips to keep you started and motivated.

Keep it simple.

Your first move might be to look for a Quicken program (which costs money) but there is nothing wrong with using a simple Excel spreadsheet or even a legal pad.

Stay goal oriented.

Why are you doing this? Do you need to rebuild cash savings? Are you trying to buy a ? Do you have a specific goal for a ?

Separate fixed and discretionary spending – then set up subcategories.

There are fixed expenses you must pay and then everything else. Rent or mortgage, car insurance, insurance are fixed and make a note of those expenses. Entertainment, food, gas for the car, and credit cards to some extent are a little more flexible. Analyze how you spend your discretionary dollars and create subcategories. Note those expenses.

What is your income after taxes and other deductions?

Make a note of your income. By subtracting all expenses from the income you can see where you typically fall. If you are short on cash at the end of the month, start by analyzing discretionary spending. Where can you cut?

Make debt payment a priority.

Any budget needs debt elimination as a primary goal. Figure out the maximum you can afford to pay credit card companies each month. Set a goal for a final pay off and stick to it.

Build in buffers.

As you create your budget, think worst case scenarios. The highest electric bill you’ve had, the highest water, etc. This will build in cushion and prevent surprises that could knock you down.

Anticipate expenses.

Each months offers a little variety. Maybe you pay taxes in April. You might have a birthday in June. School starts in September and you’ll need to buy school supplies. Try to build into your budget those anticipated expenses.

When you are conscious of your budget you are better able not to let those small expenses add up and eat away at your financial health.

Source: Today