How to create a family budget that’s right for you


Use budgeting tools

One solution is to write down these expenses, if you have paper, a pen, and a place to write each time you spend the money. A more convenient way would be to use various budgeting apps, such as mint, a free budget planner and a credit tracker. Honeydue is a free app for budgeting with your partner. Nerdwallet has a free app that will help you track your spending, credit score, and net worth. And you can still use AARP’s online budgeting tool.

Tracking your spending will give you a good idea of ​​where your money is going and how you can save more of it. For many people, budget breakers are usually little things that add up over time, says Ray Ferrara, financial planner for Provise Management Group in Clearwater, Florida. “Most people ignore ‘creepers’,” Ferrara says. These are the things that creep into our spending habits. “We go to the grocery store and buy things that are not on the list. We can’t say no to the grandchildren’s latest toy / video game. These are all impromptu decisions that on their own don’t seem to blow the budget up, but when added up over the course of the year, they have the potential to do so. “

A budget is something you can’t just write down and forget – if you want to put it to good use, you’ve got to follow it and see where you stray from the course. “For the most part, people are spending more than they expected,” says Jeffrey Corliss, financial advisor in Westport, Connecticut. In a way, it’s like piloting a boat, he says, “You can make changes before you end up in the ocean.”

One way to make it easier is to automate your savings, rather than writing a check every month. There isn’t a financial institution in the world that wouldn’t be happy to use your bank account on a regular basis. Set up an automated savings plan with a bank, brokerage house, or mutual fund company and leave it alone, if you can.

Put together

The idea behind a budget is to have savings, and the idea behind saving is to have money when you need it or want to spend it. It helps to think about having several buckets of money saved. (Some people call them envelopes, based on the old-fashioned system of putting money into various envelopes marked for different spending needs.)

You should have at least two savings compartments for the money available when you need it: one for emergencies and one for retirement. You can divide emergencies into two subgroups, if you wish. A smaller one – $ 1,000 or so – is for the inevitable car repair, dishwasher replacement, or emergency vet visit. If you keep this in good repair, you won’t have to charge for these expenses.

The other emergency fund is for a large expense, which usually means a fund to pay the bills if you lose your job. Most financial planners recommend a fund equal to three to six months of spending. That’s a terrifying amount for a lot of people, but remember: it’s for your fixed expenses, not your entire salary. If you have $ 3,000 in monthly take-home pay and $ 2,000 in fixed expenses, you will need $ 6,000 to $ 12,000 in your emergency fund. It’s always a little terrifying, but it’s a goal: to set aside a certain amount each month.

How much to save for retirement depends on your age, how much you have already saved, and what other resources you have, such as social security or a pension. You can use the AARP retirement calculator to help you determine how much you will need for retirement. But again: the idea is to start saving, or increase savings, from the money you saved by creating a budget.

The last category of savings is the best: money to improve your life. This can be for a new car or a home improvement. The sky – and your budget prowess – is the limit. Working for a living and not spending on things you love can make life a chore. Creating an achievable budget means that you can not only take the worry out of running out of money, but you can also spend it in a way that brings you happiness.


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