Creating a Household Budget
The Benefits of Creating a Household Budget
budget, after all, is a very useful guide, and tells you if you’re on the financial path that you want to be on.Here comes that dreaded “B” word again. Yes, we mean budget. Today, we’re talking about the benefits of creating a household budget and we all know that every family should have one, don’t we? A
Creating a household budget not only tracks your spending, but it allows you to set up a savings plan as well. Setting up a good budget will allow you to set goals that you can achieve, and track your progress in meeting them.
Even major corporations and the government create a budget to track their goals. In the case of the Federal government however, money is spent, more money is printed, and that is spent also. (Bad example.)
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Creating a household budget lets you control your money instead of your money controlling you. That assumes though, that you follow your budget. The easiest way to set up a home budget is with a good software program. Most of them will already have the various categories identified, such as mortgage payment or rent and food, clothing, etc.
Setting Up A Household Budget Isn’t Difficult
Creating a household budget need not be overly complicated, and remember, it is not cut in stone. What that means is things change and your budget needs to change as well.
For a young couple contemplating marriage, creating a household budget should be done before marriage if possible. Both parties need to discuss their finances openly and put everything on the table, especially debt.
Today, student loans are at an all-time high with the average in the area of $32,000.00. In addition to that, credit card debt can be an eye opener to put it mildly. All of this needs to be budgeted with an emphasis on reducing and eliminating debt.
There are many good budgeting software programs available, some that you only work with online and others where the software can be downloaded to your computer. I personally favor the latter, and one that allows you to import your bank transactions to save time.
When creating a household budget, remember that it must be one that is realistic and one that you will be able to follow. Besides the usual expense categories, set up debt reduction for credit cards, student loans, and car loans.
Also be sure to include a category for saving for retirement. I know when you’re a young couple just starting out, retirement sounds like a lifetime away, but don’t wait. Start small if you have to, but start.
Be Sure To Include Reducing Debt In Your Budget
One of the most important benefits of creating a household budget is that it helps you to track your spending. That alone can provide you with extra cash to get rid of worthless debt like credit cards.
Reducing and/or eliminating debt can help to relieve a lot of stress caused by financial problems. If you didn’t know this, financial stress is one of the leading causes of divorce in the USA. Don’t be one of those statistics.
If there’s one thing in life that you can be sure of, it’s that we all will have some emergency pop up when its least expected. Planning for and including an emergency fund when creating a household budget will help a lot when it strikes. It may be a large medical expense or major car repair, or even a loss of a job.
Hopefully a couple will be able to work together when creating a household budget, and will have common goals that they can work to achieve. More importantly, if one of the spouses’ brings high student loan debt to the marriage, both will work together to get it paid as quickly as possible.
If the finances permit, set up a fund for a vacation together, even if for only a few days. In today’s hectic lifestyle, this is important.
Even with all of the benefits mentioned above, some individuals simply hate the idea of budgeting, or don’t know how to get started. Others feel like they can’t live within a budget due to restraints built into it.
There is no one size fits all type of budget. Creating a household budget is unique to each family and should be structured in such a way that it can be modified if necessary. As you get older, wants and needs change and your budget must be able to adapt, otherwise you’ll just ignore it.
So, please don’t delay, if you haven’t done so already, start creating a household budget for your family and enjoy the benefits that will come.
Gust Lenglet is the CEO of HBS Financial Group, Ltd., an accounting & tax preparation firm in Maryland. He has more than 25 years of experience in the banking and financial industry. Gust started his career as a loan officer at a major national bank, and then moved on to become controller of a multi-state law firm. In recent years, he has written many financial articles that have been published on Ezine Articles and many websites.