For some of us, budgeting is second nature. For others, it seems a nearly impossible task. There are just so many things to consider that it’s hard to decide where your funds should go.

Setting priorities makes budgeting much simpler. But even this is difficult for many household money managers. Priorities are somewhat subjective, and those within the household often have vastly different priorities. Here are some ways that you can make priority setting a little easier:

1. Keep first things first. When it comes down to it, there are only a few things that we truly need to survive. These things include food, water, clothing and shelter. Transportation and other things that enable us to work and continue to make money also fall into this category. These should always come first in the budget, although it’s always a good idea to do our best to save money on them.

2. Keep savings in mind. We all need to put money aside for emergencies and set up a retirement fund. It’s also wise to set up a college fund for each of your children as early as possible. But many families push savings to the side, and it often ends up out of the picture altogether. Putting money away prior to any discretionary spending is crucial if you wish to meet your goals.

3. Evaluate your debts. If you have none, you’re in the lucky minority. Most households have large amounts of debt, including mortgages, car payments, loans and credit cards. By paying your debts off as quickly as possible, you can save lots of money in the long run. And once they’re paid in full, you’ll have a lot more wiggle room in your monthly budget. Putting as much money as you can afford toward paying off debt will help you reach that point much faster.

4. Set goals as a family. Maybe you would all like to go on a nice vacation next summer. Get everyone involved in deciding where to go, then calculate your expenses. Get everyone involved in saving money for this goal. Not only will you get to go on a family trip, you’ll also be teaching your children about budgeting and teamwork.

5. Review your budget periodically. A family’s needs change over time, and if your budget is no longer meeting your needs, it’s time for a change. Once again, you’ll need input from everyone in the family to make this work.

Priorities are at the heart of a successful budget. By keeping them in mind, we can resist impulse spending and make progress toward our financial goals. And by getting input from the entire family, you can gain valuable insight into individual needs and encourage interest in working together to keep your finances in good shape.

Most of us have fond memories of the trips we took and the activities we participated in when we were in school. But when it comes time for our children to do these things, we may balk. It’s not that we don’t want them to have fun and educational experiences in school, it’s that they’re just so expensive.

Today’s school trips are often much different from those we went on during our school days. They often involve traveling out of state and staying one or more nights, even for elementary and junior high students. Even day trips have become more expensive, requiring parents to pay bus and admission fees. This is generally a result of reduced education budgets.

Handling requests to go on field trips and participate in activities can be difficult. Here are some ways you can work these things into your budget.

* Pick and choose. If your child’s class goes on multiple trips during the year, you may not be able to afford them all. Consider saying “no” to some of them. Talk to your child about which ones he wants to attend the most, and look at the educational value they provide. Then make a decision and stick with it.

* Be honest with your child. She may feel that it’s not fair that she doesn’t get to go on a trip that “everyone else” gets to go on. Explain that you would pay for the trip if you could, but it’s just not an option.

* Talk to your child about raising the money on his own. Older kids could get a part-time job to earn the needed funds. Younger kids might do a fundraiser such as a car wash or bake sale to get the money they need. If your child gets an allowance, perhaps he could pay the fees out of that.

* For big, expensive trips, find out if you can make payments. Coordinators often let parents know about such trips well in advance, and they may even set up a payment schedule for everyone. If you don’t feel that you can pay on that schedule, meet with the coordinator and ask if you can set up an alternate one.

* Consider asking relatives for help. Perhaps each grandparent, aunt or uncle could contribute a small amount to help fund the trip. If you can get several people to give a small amount, it won’t put a burden on anyone.

Field trips and other activities usually have educational value, and they foster a love for learning. But if you can’t make room in the budget for them, there’s no need to feel guilty. If you explain why you can’t afford to pay your child’s way, there’s a good chance that she will understand. She might even take it upon herself to raise the money, and that in itself will be a valuable learning experience.

Pregnancy is exciting. It’s a time filled with baby showers, ultrasounds and nursery redecorating. It’s a time of joyful anticipation. And it’s a time to think about your household budget.

But moms- and dads-to-be often forget about that last item. With everything that’s currently going on and upcoming, money matters can easily be the last thing on their minds. However, a new addition to the family will have a significant impact on the budget, and it’s very important to consider this ahead of time. Here are eight things you can do to prepare for the baby and keep your finances in order.

1. Start saving extra money as soon as you learn about the pregnancy. Those first few months won’t be as expensive as mid to late pregnancy, so you should be able to put a fair amount of money away. This fund will be helpful when it comes time to buy things like maternity clothes, baby furniture or a stroller.

2. Seek out deals on basic needs such as diapers, wipes and baby wash. Clip coupons from your Sunday paper or find them online, and then check your favorite stores periodically for sales. You’ll be glad that you stocked up on these things later on.

3. If you know the baby’s gender, put the word out to friends and relatives. They may have some baby clothes that you can use. Even if the gender is uncertain or you want it to be a surprise, you can probably get some donations of neutral clothing to help you get through those first few weeks.

4. Start checking out prices on things your baby will need on a regular basis. It may be difficult to determine how much formula she will drink or how many diapers she will go through in a month’s time, but at least you’ll have a general idea of what to expect. You may want to give it your best guess and work on a tentative budget to give yourself a head start.

5. Understand that a new addition to the family will raise many of your expenses. You’ll buy more groceries. You’ll use more electricity warming up bottles and turning lights on in the middle of the night. You’ll use more water giving baths and washing tiny clothes and bedding. Take this into account when planning your post-birth budget.

6. Resist the urge to take the easy way out when it comes to meals. When you’re tending to a newborn, it’s easy to fall into the habit of eating takeout and convenience foods. But cooking is less expensive and far healthier for you and your family. Ask other family members to help with food preparation so that it won’t be such a chore.

7. Set some money aside for medical expenses. Babies need several check-ups during their first year of life, and they’ll also need medical attention in the event of illness. Health insurance helps a great deal, but you’ll probably still have some out-of-pocket expenses such as copays and over-the-counter medications.

8. Weigh your childcare options. If a parent plans to stay home with the baby, it will significantly affect the budget. If you take him to daycare or a sitter, it will also have an impact. It’s important to carefully think things through before you make a decision and adjust your budget accordingly.

When there’s a little one on the way, it’s important to think about the financial implications. Planning ahead will make things easier when your bundle of joy arrives, allowing you to enjoy those first months and years without worrying about money.

Do you ever feel like the money you earn is just passing through on its way to someone else? A lot of us do. All too often we spend money as quickly as we get it. Some of that money goes toward necessities such as food and shelter, but a goodly portion of it often goes toward unnecessary items.

Whether you can’t seem to save up any money for a rainy day or you’re having trouble getting the bills paid, a household budget can help. Even if you don’t seem to have any money problems, a budget can be of use. Carefully monitoring your spending allows you to save money for retirement, your kids’ education, and any other goals you may have.

Creating a Budget

Setting up a budget is not as difficult as it sounds. All you have to do is list and prioritize. It may not be the world’s most exciting activity, but it’s quick and painless.

The first thing to do when creating a budget is to make a list of all of your monthly income. This includes your pay from work, any self-employment income, and interest and dividends from investments. Some months you may have extra income such as bonuses or tax refunds. And if your work hours vary, your pay will fluctuate. So it’s important to figure the amount you have coming in each month.

Once you’ve listed and totaled your income, it’s time to list your expenses. Start with the necessities that are the same each month, such as rent or mortgage, car payments, insurance and loan and credit card payments. Then figure variable expenses such as electricity, groceries and gasoline. You might want to compute an average over several months to use for these figures, use the highest figure you have on record, or estimate.

Last on the list should be discretionary expenses. These are things you can live without such as entertainment, hobbies and collectibles. Use a realistic figure for these items so you can see where you stand.

Add up all of your monthly expenses. Are they more or less than your total monthly income? If they’re less, you’re off to a good start. If they’re more, you have some work to do. Look at your discretionary expenses and see where you can cut back. If you cut them out completely and still come out in the red, see if you can find ways to cut back on your variable necessity expenses. Some ideas include driving less and using coupons.

Once you have your expenses at a manageable level, you should have some extra money left over. If you have loans or credit card balances, consider using that money to pay a little extra on them. Doing so will reduce the amount of interest you pay and get you out of debt faster. Otherwise, the best course of action is to put it into savings or investments. This will help you be prepared if something unexpected happens.

A household budget plan will help you track your expenses and determine where adjustments need to be made. It can put an end to juggling bills and ease financial stress. If you don’t have a budget, now is as good of a time as any to make one.

Now that you’ve examined your income and expenses and created your budget, is it workable for you? The best budget is the one that works for you. As you use it, feel free to adjust the amounts in the expense categories according to your realistic needs.

For example, if you had designated $300 per month for gas, but the gas prices rise, you may need to go back and raise the amount in the budget. Keep your budget up to date so you can continue to enjoy its benefits.

Does your budget have workable amounts, but you find that you’re still having difficulty staying within your budget? Try the Envelope Method to easily keep track of your spending in each category.

THE ENVELOPE METHOD

The Envelope Method requires you to move to a cash-only system. Although this may sound like a challenge, it’s really easier than you think!

This technique is an easy 3-step process:

1. Divide and conquer. Each payday, cash your paycheck at your bank, then divide the cash into different envelopes for each expense category.

✴ For example, label one envelope Rent or Mortgage, one envelope Groceries, one envelope Car Payment, and continue in that manner until you have an envelope for every expense. Include an envelope for daily spending money for things like lunch or parking.
✴ To determine how much to put into each envelope, look at your monthly budget and then divide the monthly expense by 2 if you get paid twice each month or 4 if you get paid every week. So if you get paid every week and your grocery bill is $400/month, take $100 out of each paycheck and put it into the Groceries envelope.

2. Use cash for your expenses. Once your paycheck is divided up, it’s very easy to keep track of your spending. That Groceries envelope, for example, is your grocery money for the week. Spend it wisely. Once you spend the money in that envelope, that’s it for that week.

3. Effortlessly limit daily spending. Each day, put the cash from that day’s Spending Money envelope into your pocket or purse. That’s your spending money for the day. When it’s gone, stop spending!

✴ Making a separate envelope for each day’s spending money helps you stay within your budget without having to keep a mental figure of your balance in your mind at all times.
Besides making it easy to limit your spending to the budgeted amount, the Envelope Method also gives you a better sense of your money.

When you pay cash, you’re more likely to see the real impact of your spending, even if it’s small expenses. As you’ll notice, small expenses really add up!

TIPS TO REDUCE YOUR EXPENSES

If you find that you’re spending more than you make, you have two options:

1. Make more money.
2. Reduce the amount that you spend.

There are many techniques you can implement to bring in more money. These methods are discussed in a later module dedicated to increasing your income.

It’s usually more difficult to reduce your fixed expenses, though it’s not impossible. For example, if you rent an apartment and your lease is about to expire, perhaps you can find an apartment that costs less.

If your cable package features channels you don’t use, inquire about changing to a less expensive plan. In the same way, you may be able to reduce your cell phone plan.

Most likely, you’ll make cuts in the variable expenses. Things like entertainment, food, gas, and even energy expenses can easily be reduced.

ENERGY SAVINGS

With energy, it’s fairly simple to reduce your bill. Turn lights off when you leave the room and switch to more energy efficient bulbs. Unplug your electronic devices when they aren’t being used, because they use energy even when they’re turned off if they’re still plugged in.

If you have some money tucked away, newer models of appliances – like washers, dryers, and refrigerators – are also much more energy efficient and can pay for themselves in energy savings within a relatively short amount of time.

Other expense categories, like food and entertainment, have more options when it comes to saving money.

FOOD SAVINGS

Buying groceries is a necessary expense, but one that you have a lot of control over. A run to the grocery store can be devastating to your wallet if you let it, but it’s also one of the best places to save money.

Here are some excellent ways to reduce the amount of money you spend at the grocery store:

1. Sales. Most grocery stores usually do a good job of putting everyday items on sale. If you buy the product on a regular basis, you might as well take advantage of the discounted price, and buy it when it’s on sale.
✴ The savings on each item may not be much, but you’ll find that a few cents deducted here and there add up quite quickly.
✴ Planning your weekly menu around what’s on sale that week can turn into some significant savings.
2. Savings Card Programs. Plenty of grocery stores have implemented savings card programs, which give you a wider range of discounts to take advantage of. For many of us, groceries are one of our biggest expenses, so the more ways we can save at the store, the better.
✴ On rare occasions, they might even have a blanket discount, like 10% off the total bill, at certain times of the year. Watch for these promotions so you can make the best use of them.
3. Coupons. Your most potent weapon against the grocery bill is coupons. You can find them in newspapers, flyers, and hundreds more online. These coupons can range from five cents to 100% off the cost of the item. You can’t get better than free!
✴ While a coupon for a certain product may limit you to one product per coupon, you can often pick up several of that item by simply using a coupon with each item. It’s easy to obtain multiple coupons.
✴ Some stores even double the amount you see on the coupon, so you’ll definitely want to look into which stores have such a program because it can add up to big savings very quickly.
✴ One thing you don’t want to do is underestimate the power of the coupon! It’s possible to buy two hundred dollars worth of groceries, hand them a stack of coupons, and only end up paying a tiny fraction of the price. Ask any cashier if they have customers who do that regularly, and they’ll agree!
✴ Reducing your grocery bill by hundreds of dollars with coupons is surely a quick way to balance your budget while still eating like royalty!
4. Stockpiling. Buying in bulk has become a trend when it comes to grocery shopping. Stores like Sam’s Club and Costco thrive on selling items in bulk at a low price. When used in moderation, buying in bulk can be a great way to save money.
✴ Be careful not to get carried away when shopping in stores that sell in bulk. Plan out what you may be able to use before the expiration date and shop accordingly. Keep in mind, also, the amount of storage space you have available in your home.
✴ One of the benefits of stockpiling is that you don’t have to go to the grocery store as often. Fewer trips to the grocery store saves you time, gas, and grocery money.
✴ You can take advantage of buying in bulk even if you’re single. Divide the cost and the spoils of your treasure trip with some friends. This way, all of you can save money and still avoid the inconveniences of stockpiling large amounts of stuff.
When you take advantage of these methods to save money on your regular expenses, it leaves room in your budget to increase your spending in other categories. In turn, staying within your budget becomes a whole lot easier!

The best way to acquire financial security is to have a sound budget. With a realistic budget, you can have more money to plan that vacation or buy that awesome big screen TV with the surround sound system. In order to indulge in these luxuries without utterly destroying your bank account, you need a budget.

Not to worry, though! It’s not as bad as it sounds. It’s actually quite simple.

HOW MUCH DO I MAKE?

The backbone of any budget is based on how much you make. Even if your income is lower than you’d like, you can still budget successfully, but it’s important to know what you have to work with in order to create a balanced budget.

When budgeting, it’s critical that you use your net income as opposed to the gross, that is, the amount after all deductions and taxes. Doing so will give you a more accurate representation about what you have today, factoring in what the government takes as deductions.

For all practical purposes, what is being deducted from your paycheck is money that isn’t yet available to spend. Then when you file your tax return, treat the refund like a bonus.

If you have a variable paycheck, using a close estimate should suffice in most situations. A realistic estimate can be gathered by totaling your income from the past 3-6 months, and then divide by the income you received in that time.

WHAT ARE MY FIXED EXPENSES?

There’s no way around it; we all have bills to pay. Some bills vary from month to month, but there are others that are constant. Many loans are structured so you pay the same amount every month. For example, your car or home payments are fixed expenses. Rent and cable bills are also usually the same amount every month.

Some examples of common fixed expenses are:

✴ Mortgage or rent
✴ Car payments
✴ Car insurance
✴ Property taxes
✴ Home insurance
✴ Loans and lines of credit

Take some time to make a list of your fixed expenses and total the result.

WHAT ARE MY VARIABLE EXPENSES?

This is where making a budget gets a little bit tricky. Not every bill is the same amount every month. You don’t always spend the same amount at the grocery store or on gasoline. It’s easy with the fixed expenses, but here there is room for error. Use an average amount of each variable expense for your budget.

The good thing about variable expenses is that you can change them. As you’ll see, reducing these variable charges is a great way to keep more of your hard earned cash.

Some examples of common variable expenses are:

✴ Car maintenance
✴ Gas
✴ Food
✴ Electricity
✴ Heating

Take a few minutes to list your variable expenses and total the result. A good strategy is to go through your recent credit and debit card purchases to see where your money is going.

WHAT ARE NON-ESSENTIAL EXPENSES?
There will always be things that we want, but don’t necessarily need. These types of purchases fit into the non-essential expenses. The difficulty here, is that we often confuse what we want with what we need.

A good test of willpower before making any purchases over, say, $50 is to ask yourself: “Is this a want or a need?”

If you can’t answer that question honestly, then give yourself 24 hours to think about it before making a decision.

Some examples of non-essential expenses are:

✴ Excessive amounts of clothing and shoes
✴ Entertainment (i.e. DVDs, movies, books, magazines)
✴ Video games
✴ Eating out
✴ Excessive gift purchases
✴ “Stuff” you buy because it’s on sale
Make a list of non-essential expenses and their total. Ask yourself: Do I need everything on this list? Is there anything I can cut out without losing the lifestyle I desire?

WHAT ARE MY TOTAL EXPENSES?

Write down all your fixed, variable, and non-essential expenses and add up the total. This total will be your base expenditure for the month.

This is the bare minimum you’ll need to make in order to have a balanced budget. If you make more, that’s great. If you don’t make more, then go back and look at your variable and non-essential expenses, like entertainment, new clothes, or even your grocery or electricity bill, and find ways to lower these charges.
EARN MORE THAN YOU SPEND

The only way to create a workable budget is to adhere to this one simple rule: Earn more than you spend.

Obviously your goal is to earn a whole lot more than you spend, but if the numbers are close, that’s okay; you can still work with that, but a wide gap would be ideal.