If you don’t have a family budget you aren’t actually in control of your cash. You can download a free template that you can use to set up spend tracking or, if you like, you can make your own. Let’s look at how to set up a simple option.
You can do this by hand if you like but it is easier and quicker to use some form of spreadsheeting software. If you have Microsoft Excel (and know how to use it!) that’ll be fine. If you don’t, then consider downloading OpenOffice. This is a free software suite that basically does everything that Office does without the high cost. Its Calc program will do the job for you.
Your basic aim is to set out how much cash you have coming in and how much you have going out. Some people make a core budget once as a point of reference; others will do this and then produce a monthly version so they can track their spending more effectively.
In either case, you need to set down the basics. This involves calculating your monthly income and then subtracting your costs from it. These costs should include essential spending at the very least; you can choose whether to budget out non-essential spending or just leave that as a lump sum at the end if you wish. We’re just going to look at the essentials here.
So, where do you start?
- List all the money you have coming in. This should include salary/salaries, benefits, child support payments and pensions – anything that comes into your account every month on a fixed basis. If you get irregular income such as bonuses or overtime, you should probably list this as a separate field unless you are guaranteed to get it every month. If there are times when you don’t get these payments, then factor them out of your core budget and add them monthly as they come in.
- Work out how much you need to pay out every month. It’s easier to track this over a few months to pick up costs that come in less frequently (i.e. quarterly utility bills or annual payments). Examples of essential spending include your mortgage/rent payments, Council Tax, loan and credit card repayments, insurance policies, pension contributions (if made outside of your salary), phone, power and water bills, TV licence, vehicle costs (if you need to use a car/cars) or travel expenses and clothing and grocery bills. Basically, this column should include everything that you have to pay for each month and cannot do without.
You then set up a formula that subtracts your costs from your income. Ideally, this will leave you with some surplus cash. If you want to take things one step further you can also add areas for non-essential spending such as holidays, eating out and everyday costs. This can be worth doing as it can show you areas where you are over-spending or wasting money and, therefore, opportunities to budget better and save a little more.