The family budget - the first step in a family's financial plan

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The scenario rarely varies much - the income generally is fixed, and the outflow only seems to increase. If too much money gets spent, the shortfall gets added to the debt load.

As the debt load increases, more of the money coming in goes to paying the debt, which leaves less for spending, which increases the debt. Sound like a vicious endless cycle? It is, and many families can't seem to find their way out of the circle.

When asked "where does the money go?" most families will quickly respond "for necessities--food, clothes, things for the kids. Nothing is wasted."

Is it a fun task? Not really! Can it bring big rewards to your family finances? Absolutely!

Have a Family Financial Plan

Without a definite financial plan, your budget goals will probably be doomed. Like diets, many of us have started on family budgets only to see them wither away with time. If you are like most of us, you will probably need a program with some structure but will not force you to turn your life inside out. We've found a couple of excellent sources to get your start.

Review your credit report

Start the process by taking a look at your current Credit Report. A strong and accurate credit report is one of your most important financial assets. Not only is it a clear picture of your indebtedness, it can reveal problems or discrepancies which could bar your access to further credit.

Getting a problem repaired now is always easier than attempting to do it after you have applied for a mortgage or car loan. Fing out what's in your credit report today - so it's 100% accurate tomorrow. Order a 3-credit bureau report from CreditReporting.com.

Gather financial records

The process of developing and maintaining your family budget is much simpler if you have the records of what you are currently spending on hand. Rather than saying "I think we spend about $300 a month on groceries," you will have the exact average monthly expenditures for various items.

Keep bills from utilities, physicians, service stations and any expense that varies from month to month. Once you have a running total for several months you can develop an average and adjust your budget up or down accordingly.

Evaluate expenditures for their value and necessity. For example, stop buying things that are rarely used, like expensive toys that sit in the corner or things for hobbies that were never taken up, 4 Wheel Drive vehicles that are a thousand miles from the nearest snowstorm.

Stop "investing" in wasteful items and then get rid of those that you have and convert them into cash by selling them.

Start putting the reins on spending that increases your debt load, both on necessary items (like food and shelter) and those that are not necessities.

Save money on your every day spending and get control of your purchases. Then, with the aid of a family budget, designate a specific amount monthly toward debt reduction, not just paying the monthly minimums but adding enough to make a concerted effort at debt reduction.

Consider home equity loans that can consolidate your debts into a lower monthly payment (and generally a lower interest rate) so you can concentrate on debt reduction.

Incorporate Your Goals

Family budgets that include established short or long term goals are always the most effective. For example, you may decide that "we want to trim enough from our current spending so that we can buy a $2500 Certificate of Deposit within 6 months to begin a college fund." or, "the savings from our budget will pay for our entire vacation next August so that nothing will be added to the credit cards."

Discussion is important here so that everyone focuses on the same goal or goals. Start slowly with a fairly easily attainable goal and then "test" yourself with a more difficult (and rewarding) goal as you get more proficient at your budgeting process.

Develop Your Family budget

Just the idea of a budget makes a lot of families shudder. Many feel that it will be too restrictive and limiting. They assume that they will lose too much of their spending freedom, taking away some of the pleasures in their lives.

In reality, an effective family budget does the opposite: by keeping track of your expenditures, it allows you to concentrate on those items that bring the highest reward, both financially and personally.

An effective family budget puts YOU in control of your finances, rather than letting the control slip into the hands of chance.

Quick and Easy Budget Book: A Practical Workbook for Balancing Your Household Budget is a great and easy book to get your finances organized and under control. This book is comprehensive, easy to understand, and simple to use. It will make a big difference in your finances and keep you on track! The instructions were clear and concise and before I knew it, I had developed a budget that I can live with. If you want to start keeping track of your budget, this is the book you need.

This is an easy, yet complete book for balancing your budget. You are introduced to a method of record keeping that is very flexible and yet at the same time thorough. It walks you through the easy steps of determining your past income and spending history. Then it guides you in planning for the next year. Space is included for recording your monthly budget and actual income and expenditures. Makes tax time a snap.

About the Author
Dianna Barra, M.S. taught consumer math at a junior college for five years. During that time she realized there were no decent budget books available for use by her students to learn how to handle their finances. So calling upon her teaching experience and the many budget seminars that she had attended, she developed a book that filled this need.

Your Money or Your Life: Transforming Your Relationship With Money and Achieving Financial Independence by Joe Dominguez and Vicki Robin shows how to frame personal finances in a whole new context, how to downscale spending while maintaining a sense of abundance.

There's a big difference between "making a living " and making a life. Do you spend more than you earn? Does making a living feel more like making a dying? Do you dislike your job but can't afford to leave it? Is money fragmenting your time, your relationships with family and friends? If so, Your Money or Your Life is for you.

From Your Money or Your Life, you will learn how to: