Family Budgeting 101 – Part 2

It is tough enough juggling (akin to cat-juggling) and paying for a large family without the added stress of having a financial mess that rivals the current mess that is The Kardashian’s. When dealing with the extra challenges of raising a large family (all worth it of course), do you really want to be in financial distress? I didn’t think so. That’s why Budgeting is so important.

No a budget isn’t a magic wand that makes everything alright. But it will help give you some financial peace of mind. And a task that can reduce stress,  is a thing worth doing.

I’ve seen budgets with anywhere from 3 (needs, savings, wants) up to 70 categories, yes 70. My current budget spreadsheet has 22 categories and next to each category is a column labeled “budgeted” and one label “actual”. There is a 3rd column labeled “remaining” that tells me how much is left in each category or how much I have gone over. Plus the columns are totaled at the bottom for the big picture view. I also have a table to track my income. And then there are columns and rows where I list every purchase made each month as they happen.

It may seem like a lot of work. But once you have the initial setup done it’s not hard to use at all. You do have to enter everything you spend money on but I enjoy doing it. And it gives you a great handle on your finances. At the end of each month you know exactly how you did, good or bad. You are either in the red, black or even.

If this seems overwhelming then maybe a simple 3-category budget might be better at first. You first list all your needs and how much they will cost you each month. Mortgage, food, utilities, charity, insurance etc…and no, going to Five Guys for a burger and fries is not a need (although it is pretty close). Second, you write down the amount you want to use for savings and paying down debt. Then whatever money is leftover goes in the “wants or blow” category. Just remember once you have spent everything in the “wants” category, you are done for the month. So plan well. This is an easy way to get started on budgeting until you feel that you are able to switchover to a more detailed budget. Some people do just fine on the simple budget but I find that I do better on the more detailed one.

Just because you have money left in a category doesn’t mean you can spend it. Well you can, but should you? Let’s say it is the last day of the month and you have $20 left in your food category. Should you rush out and buy a box of Ritz crackers, a can of Cheese Whiz and a bottle of Mad Dog 20/20? Or should you add that $20 to your retirement account or apply it to a credit card balance? Do they even sell Mad Dog 20/20 anymore?

Below is a snapshot of the spreadsheet I use.

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