I’ve made a budget since my early twenties… long before I got married and had a family. I like knowing where my money goes. Lucky for me, my husband is the same way. And he’s real smart and techy, so he makes me cool spreadsheets, graphs, etc. so I can keep track of everything. It makes budgeting so easy.
I am surprised that many people don’t do household budgets. Many people have never budgeted or don’t do it on a consistent basis.
And I can’t imagine not having a budget.
A budget is simple, and it should be. Don’t make it complicated. This way you will be able to stick with it. A budget is a great way to save money for your future, reach goals, and to not waste money or overspend.
So if you are just starting a budget or want to, here are the basic things you need to include in your budget.
Things to Include in Your Budget
Debt
You can actually break this category into subcategories if you want. But under debt include all the payments you have to make each month.
- Mortgage/Rent
- Loans
- Credit cards/Student loans
- Car payment(s)
Life Insurance
I cannot stress to you enough the importance of life insurance. You need to make sure you budget your life insurance premium into your budget because the last thing you want is to let your life insurance policy lapse.
Even though life insurance isn’t a topic many people want to talk about, it’s a crucial thing to discuss. If you want to make sure your family and loved ones’ financial future is secure, keeping life insurance payments up-to-date needs to be factored into your budget.
Savings
The advice to “Pay yourself first” is a good piece of advice. I do know that it isn’t always easy. If money is tight, finding a way to put money back for savings (this includes an emergency fund) for your children’s college education and retirement, for example, can be tough. Try to save 10% of your paycheck if you can, but if you can’t, then save something. Something is better than nothing. And it will add up if you do it every single paycheck.
I want to touch on an emergency fund that I mention above just a bit more… make sure your emergency fund is liquid. What I mean is, make sure it’s easily accessible not a hard to access account. It is a good rule of thumb to have at least 6 months of living expenses in your emergency fund.
Necessities
This category contains the bills you have to manage and live day to day. Things like…
- Utiliites (electric, gas, water, garbage, etc.)
- House Insurance (whether monthly, bi-yearly, yearly, etc.)
- Gas (or public transportation)
Food
This category is easy to overspend on, so sit down and figure out how much money you need each week (bi-weekly or monthly) for groceries for your family and be deligent about sticking to your food budget. If you do plan on eating out a few times a month, be sure to factor that into your budget, too.
Health Care
Just like life insurance, budgeting for monthly health care payments, like health, dental, and vision insurance is a must. If you or someone in your family takes prescription medication monthly, be sure to budget for pharmacy expenses, as well as glasses and contacts
Personal Care
I’ve not always budgeted for personal care. It’s nice to get a manicure or go to the salon for a professional color and/or cut, but sometimes these things just don’t make it on the budget. If times are tough or you’re just starting a new job, you might forgo personal care. However, if getting your hair done every 4-6 weeks is important to you, then budget for it.
Do allow in your budget personal care for your family the things that are important like…
- Beauty products
- Personal hygiene products
- Clothing/Shoes
Entertainment
This is another category that I’ve not always included in a budget. If money is tight, I would forego entertainment, like movies or concerts, for example. You’d be surprised at the things you can find to do in your area that is free or really cheap. But if things are okay financially, add fun and entertaining things to do each week in the budget.
The important thing is to sit down with your family and figure out how much money you need for the bills and necessities and then allot how much you want and need to spend on the other categories.
Then… stick to your budget.
Sometimes things happen, and you may not be able to stick to your budget, but try your best. And if there are times when you find you might have a little extra, put it in savings or emergency fund.