Search

Starting A Household Budget

The numbers can be staggering. Over 60 percent of Americans don’t have enough money to cover a $500 emergency. Nearly 80 percent are living paycheck to paycheck. The average American has about $38,000 in personal debt, excluding home mortgages. Combine those numbers with the fact that fewer than 40 percent stick try to maintain some sort of budget, and you’ve got a financial mess.


Maybe you don’t keep a budget because you think it is too time-consuming or too intimidating. The truth is, a budget can take as little as an hour to get started; and once created, probably 30 minutes a month to maintain.


If you’re at the point where you understand that the family budget is an important tool towards financial health; but you have absolutely no idea how to get started, keep reading. And, don’t be afraid. Here are a few steps that can help you move forward.

  • Remember, this is a process.

There is no one right way to establish your family budget. Nor are their perfect percentages of your income that should go towards each category. Every step, even if it’s a small one towards your budget, is a step in the right direction. Every month, you’ll adjust numbers and get closer and closer to what you can maintain. Before long, you’ll find yourself managing your money instead of your credit cards and interest rates managing you.

  • Determine current income/expenses.

Gather your financial documents. You want to pull together all pay stubs, bank statements, bills, etc. – everything that shows money going in or out. With this, you can identify your starting point – your income, fixed expenses, debt, and disposable income.

  • Where are you currently spending?

Beyond your fixed expenses and debt, track where you have been spending your money – dining out, clothes, entertainment, subscriptions, etc. If it’s too difficult to go backwards, don’t worry about it. Commit to tracking your expenditures for the next 30 days. Then you can come back with an idea of where your money has gone.

  • Establish spending boundaries.

Here’s where it gets tough and where some people just throw up their hands and give up. Now that you know what you have been spending, try and set some boundaries. But be realistic. If you feel you will be successful setting smaller goals, then do it. Any step forward is just that, forward progress. Just don’t quit.

  • Identify ways to free up some money.

Whether marked for debt or savings, you want to find extra cash to improve your financial situation. At this point, either – reducing debt or increasing savings – makes things better. There are probably as many different theories about how to do this as there are financial advisors. Do what is comfortable for you. Take steps that will lead to small wins. Those smaller wins will lead to greater victories and, eventually, financial independence.

  • Pay off debt.

Let’s face it, debt is a tremendous burden. And when we talk about debt, we typically are not including a home mortgage. Paying that off will come later. But for now, you should start paying a fixed amount towards your debt. Then, as any additional funds become available, make it your priority to put it towards the debt. As for what to pay off first – higher interest rates or lowest balances – it doesn’t matter as much as following a consistent plan.

  • Establish an emergency fund.

Unfortunately, we don’t know what tomorrow holds. Whether it be a flat tire, a broken water heater, an unexpected illness, or a sudden loss of your job, emergencies are going to come up. The worst way to pay for these emergencies is by piling on credit card debt. From someone who has been there, even a small emergency fund can keep your family operational – at least for the short term. I recommend keeping at least ____ months of fixed expenses set aside for emergencies. Just those few weeks/months can provide time to formulate a plan.


Having life insurance and a will can also help protect your family if something should happen to you or your spouse. The peace of mind that comes from having these in place far outweigh the costs.

  • Evaluate and adjust.

If your budget doesn’t balance, don’t fear. And certainly, don’t quit. Remember where we started – this is a process. Continue making adjustments – sometimes small, sometimes large. Every step forward, even if it is a tiny step, will move you closer to financial health independence.


As your financial foundation becomes stronger, you’ll then have the resources to start working towards longer-term goals, whether it be investment, retirement planning, or both. If you haven’t already, it may be time to work with a financial advisor. Having a reliable financial advisor can help navigate potentially sticky situations as well as help make sound financial decisions. Even the strongest go-getters out there don’t have all the answers, all the time.

13 views

CHECK US OUT
Facebook

Twitter

GLOBAL WEALTH WOMEN IS A DIVISION

OF GLOBAL WEALTH MANAGEMENT

We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives.

Securities and investment advisory services can only be solicited in the states where a financial professional is licensed and registered to do business in. Please inquire as to which states the financial professional is licensed and registered in before engaging in a business relationship. Securities offered only by duly registered individuals through Madison Avenue Securities, LLC (MAS), member FINRA/SIPC. Advisory services offered only by duly registered individuals through Global Wealth Management Investment Advisory (GWM), a Registered Investment Advisor. MAS and GWM are not affiliated entities.

David Bach does not endorse Global Wealth Management or the presenter. The firm is not affiliated with the US government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.

Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. None of the information contained on this website shall constitute an offer to sell or solicit any offer to buy a security or any insurance product.

*Any references to protection benefits or steady and reliable income streams on this website refer only to fixed insurance products. They do not refer, in any way, to securities or investment advisory products. Annuity guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by insurance company. Annuities are not FDIC insured.

Any media logos and/or trademarks contained herein are the property of their respective owners and no endorsement by those owners of Global Wealth Management or its representatives is stated or implied. All media appearances are paid placements.

The Society of Financial Awareness "SOFA" is a paid membership organization comprised of professionals of varying specialties. SOFA is a 501(c)(3) non-profit organization whose focus is to provide financial education to individuals, businesses and organizations through member professionals. The SOFA logo and/or trademarks are property of their respective owners and no endorsement of Global Wealth Management or its representatives is stated or implied.

The National Ethics Association (NEA) is a paid membership organization. All NEA Background-Checked members have successfully passed the annual seven-year background checks for criminal, civil, and business violations in order to meet the membership standards. However, the association provides no guaranteed assurance or warranty of the character or competence of its members. Always make financial decisions on the basis of your own due diligence.

The information and opinions contained in any of the material requested from this website are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. They are given for informational purposes only and are not a solicitation to buy or sell any of the products mentioned. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual's situation.

PRIVACY POLICY | TERMS OF USE