A family budget is an important part of sound financial planning. Budgets prevent you from spending more than your income, helping to control debt acquisition. According to Federal Reserve debt statistics, the average household owed over $5,000 in credit card debt in 2009. As of March 2009, total consumer debt in the United States was $2.5 trillion. This data shows that the average American family is living beyond its means.
Cost of Living
The average cost of living for your area can give you an idea of how much you should expect to spend each month. The Economic Policy Institute offers a cost of living calculator based on family size and location. It takes into consideration the cost of living in different regions, giving you both a monthly and an annual average total for housing, food, child care, transportation, health care, taxes and other expenses. This calculation can be a starting point for your personal budget, but you may need to make adjustments.
Budget Calculators
A budget calculator can be a helpful tool in family budget planning. These calculators allow you to enter your income and your expenses. Some models, such as the one offered on CNNMoney.com, show you what percentage of your budget each type of expense should consume. For example, in an ideal budget, your housing and debt expenses should account for about 30 percent of your monthly expenditures.
Factors to Consider
Each family's budget is unique. When planning your budget, make a list of all necessary expenditures. Besides obvious costs like mortgage or rent, car payments, insurance, utilities, gas and groceries, consider the smaller expenses that can add up over time. These may include diapers, school lunches, clothing, gifts, gym memberships, vacations and veterinary bills. You also need to figure out how much money you want to put toward savings and debt payment.
Track Spending
One way to help figure out your monthly financial needs is to track your spending. For one month, save receipts from every single purchase made by every family member--whether a candy bar at the gas station, a drink at the drive-through or that impulse buy at the bookstore. At the end of the month, total these receipts. Most people find it helpful to categorize them into groups such as food, entertainment and so forth. This method shows you the areas in which you are overspending, often without even realizing it.
Long-Term Planning
Savings are important for future events such as retirement, college and weddings, as well as for emergency expenses such as car repairs and medical bills. Money-Zine.com recommends "paying yourself first," or prioritizing savings and retirement amounts in your monthly budget. You can also enlist the help of a professional, such as a financial adviser or budget planner. These experts can analyze your budget and discuss sound savings and investment options to help your family reach its financial goals.
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