How to Build a Sustainable Household Budget
Does this sound familiar? You build out a great monthly budget, with every expense meticulously thought out. But at the end of the month, something just isn’t adding up.
How can you find a household budget that you can truly stick to, month to month? Is it possible?
Is Budgeting Really Necessary?
A household budget goes beyond just keeping track of expenses. Budgeting helps us prioritize our spending, differentiate between essential and non-essential expenses, and plan for both the expected and unexpected financial events in our lives. When you stick to a budget, you’re also more aware of the money set aside for your future retirement and can avoid living paycheck-to-paycheck.
Plus, when you have a clear understanding of your income and expenses, and where that money is going each month, it reduces stress and worry!
Be Realistic
The first rule of budgeting is to be realistic. For example, if you’d like to start saving more money, you can’t just go from zero to half your paycheck. Try setting aside $50 a paycheck to start, and slowly increasing over time. In order to find a budget that works for you and your household, it is important to first be real about the figures.
Bring the Family Together
Be sure all members of the family are involved with budget planning and are committed to keeping it in place. Yes, even include the kids! Learning about finances early in life can help your kids be more prepared for their own household budgets.
Including all family members can help you also stick to the plan, together. It shouldn’t be a task assigned to only one person. Instead, working together as a family team, you can help each other stay focused and determined to meet your financial goals.
The 20/30/50 Rule
If you aren’t sure where to even begin with planning out a family budget, consider the 20/30/50 rule. Here’s how it works:
Determine the amount of funds you bring home (your net income) after taxes. Half of that figure should go each month to the things you MUST have, such as the rent or mortgage, utilities, food, debt, etc. With the other half, split it 30/20. Thirty percent of the income should go to WANTS, including dining out, entertainment, streaming services, or fun outings. In theory, these are bills that, should you have a difficult month, you could live without.
Lastly, the final 20 percent of the income should go toward savings. This can be an emergency savings (I recommend having three to six months of savings reserved for emergencies) for unforeseen incidents. If your emergency fund is safe, continue to save for things like retirement and other major purchases, such as a home or car.
A Helping Hand
Building a sustainable budget is a worthy investment in your family's present and future happiness and well-being. But sticking to a budget can be tough to take on alone. While your family's inclusion will go a long way to supporting the goal, it could also help to have a professional on your side, as well.
Whether you’re a current Gretchen Rehm Financial client or are interested in becoming one, our team can help you discuss your monthly budget. Isn’t it time you mapped out a plan that is realistic, includes your unique goals, and saves for tomorrow’s dreams? Reach out to make an appointment with me anytime.
