Author: Matthew Hick

Budgeting isn't rocket science. But, it does take some preparation, consideration and a healthy dose of reality, combined with a willingness to change some unhealthy spending habits.

There are no hard and fast rules when creating a budget that works for your family. Every family is different; and so is every budget. The key is to create a spending plan that fits your income, and that everyone in your household can live with. Setting stringent spending limits that are impractical or unattainable isn't going to help get you on the right financial track. Being realistic will. A firm commitment to spend less than you make, and save for the more important things in your life is even better. Take the time to begin the budget process right: with good planning. Here's how:

1: Keep A List of Every Household Expense for One Month.
Everyone usually has a clear idea of the big bills: mortgage, car loans, and groceries. It's the little stuff that can kill a budget. Before writing out your first set of budget numbers, it's first important to know exactly where your money has been going. For one month, record every household expense - no matter how small. You may be surprised at how much those little conveniences and splurges really add up to.

2: Make A Complete List of Spending Areas.
Once you see what you've been spending your money on, on a regular basis, it's time to make a thorough list of household and personal expense categories. Most people find their spending areas include such things as: mortgage/rent; car loans; insurance premiums; utilities; groceries; entertainment; school lunches; clothes; business expenses, etc. Include everything! Those school lunches, manicures and even that morning coffee all add up by the end of the month. Don't forget less regular bills such as annual car insurance premiums, birthday gifts/parties, summer vacations, holiday outings, field trips, membership dues, magazine subscriptions, and more.

3: Compare Your Expenses To Your Income.
Now comes the hard part: add up all of your expenses and compare it to your NET income (this is your take-home pay after taxes, insurances, 401K contributions, etc.). Many people make the mistake of thinking that if they make $75,000 a year, they can spend $75,000. Wrong! You usually only receive about $55,000 to $60,000 after normal payroll deductions. If you're like most Americans, your expenses may be much higher than your income. Now what? It's time to start getting serious.

4: Be Realistic.
Let's get real here: no one can continually spend more money than they make without serious repercussions. Eventually you won't be able to juggle the payments anymore, and something won't get paid. You're walking a slippery slope headed toward financial ruin, and it's time to be realistic. Now that you've had a chance to clearly see where your money is going ever month, it's time to start chipping away at all the waste.

Start big or start small: the decision is yours. The goal is to slash as much frivolous waste as possible from your current spending plan. That may mean taking your lunch to work twice a week, and coloring your own hair, or it may mean selling your second car and taking the train to work. The severity of the things you're forced to give up depends on how much overspending leeway you've been allowing your family.

5: Together Come Up With A New Spending Plan.
Once you've cut out all of the things you know you can do without, it's time to prioritize your spending list to see what else can go. List the most important life expenses first: your house or apartment; food; health insurance; car costs; school fees; etc. As you move further down the list, add entertainment; eating out; taking the kids to an amusement park; summer pool fees.

You know, all the things you think you need, but may be able to do without. Now, if you're expenses remain higher than your income, its time to start condensing and cutting from the bottom of this list. Sure, having a pool in the backyard may be great, but if you both work, and the kids are at summer camp all day, is the cost of its upkeep really worth being in debt? Or, would that money be better spent in some other category? How about fast food? If your family is spending more than $100 a month eating out, it may be time to reevaluate why you're not cooking a home.

Are your kids involved in too many extracurricular activities, not leaving you the time to cook and eat in? Or have you just allowed yourselves the luxury of easy dinners so long they now feel like a necessity? Now's the time for you to discuss, as a family, what is really important. If eating out three times a week is more important than going to the movies on Saturdays, or going on that beach vacation, so be it. That's your choice. Just remember, that every expense has an impact on your financial future.

Looking at your finances with open eyes and a new attitude won't be easy. Changing your spending habits will be even harder. But, establishing a solid budget, and learning to live within your means may make the difference between a life filled with financial struggles and stress, and a worry-free existence that allows you to spend money on the important things with little or no angst at all.

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Article Source: ArticlesBase.com - Finance Budgeting 101: Five Steps To Your First Budget

Author: Cornie Herring

You may get a surprise answer when you tell your kids that you have no money to buy something, they probably will tell you to charge on your credit card. For most of kids, money is for spending. Kids have this miss interpretation about money because most of us do not start talking about money with our children early enough. Kids need to understand more about money, they need to learn up the value of saving and investing, and it's not just for spending.

So, how to get start to teach your kids about the value of money? It is never too early for your kids to learn about the value of money and how to budget and save. To make thing simple, here are 10 simple ways which will help you to educate your children about personal finance and managing money:

1. As soon as children can count, introduce them to money.

Take an active role in providing them with information about money. Take whatever opportunities come up to teach kids about money. Take them grocery shopping and encourage them to read the prices and explain to them why you want to buy things on sales and why you shop at a discount store & etc. Observation and repetition are two important ways children learn. So, you take whatever opportunities come to teach you kids about money and let them learn over and over again.

2. Learning by example

Teaching children about money does not mean sitting them down every Saturday morning to a lecture on the vagaries of stock markets. In the main it means including them in the daily running of the household. This includes involving them in planning the household budget, explaining the differences between needs and wants, telling them why you have life assurance, and why you need a retirement plan. You also need to set a good example by creating a spending plan with your family. Show to your kids that setting up a budget doesn't have to be complicated.

3. Give Your Kids Allowance

Most experts agree that giving kids an allowance helps them to build money awareness. It's better to make mistakes at 13 with $30 than at 33 with $30,000. The experts recommend giving a dollar amount to match their ages. So a 10-year-old kid would get $10 and so one. This is money just for being part of the family and taking care of basics, such as picking up toys, making beds and not leaving towels on the bathroom floor. Give kids total control over how they spend their allowance. The whole point is to let them learn from their mistakes.

4. Create opportunities for your kid to earn money

Create opportunities for older children to earn additional money with jobs such as washing the car and mowing the lawn. This is the time to instill appreciation for a job well done and getting paid for your efforts. Teach them that they can get what they want through hard work, not because they are entitled to it.

5. Teach them about budgeting & credit card

Before your teenagers heads off for college, they need to learn before hand on budgeting and credit card which will help them to avoid plastic problems. College's teenagers are the most favorate market for credit card companies. College's teenagers will start to get preapproved credit card applications in mail and email. You may want your kids to go off to school with a debt card intead of credit card. So that they can't spend more than what they go in their account.

In Summary

Kids need to understand about money and how you get it into your hands as adults. Take whatever opportunities come up to teach your kids about money so that they understand that money is not just for spending and the consequences of over uses of money by withdrawing cash advance and charge everything to credit card can lead them to trap into financial crisis.

About the Author:

Cornie Herring is the Author from http://www.studykiosk.com This site is an informational website on credit basics, debt consolidation and bankruptcy. Visit her "Money Matters" blog for more money related information.

Article Source: ArticlesBase.com - Teaching your Kids About Money – 5 Simple Tips