Simple Family Budget

• 1). Discuss your financial goals. Identify both long-term and short-term goals for your family. Include serious goals, such as investing for retirement, buying a house or saving for college. Also include some fun goals, like a Disney vacation or a new sports car.
  
  
• 2). Identify your current living expenses. Review your bank account activity to determine your monthly expenses. This should include expenses for your basic needs, such as food and shelter, as well as any other payments you make regularly. Debt payments should be included here also.
  
  
• 3). Review the list of expenses and classify them between necessary and discretionary. Necessary expenses are those required to meet your basic needs, like food and shelter. Discretionary expenses are expenses that you could live without, like home decorations, jewelry or movie tickets.
  
  
• 4). Identify all sources of income. This may come from wages, retirement pay, alimony, Social Security or Unemployment Compensation.
  
  
• 5). List your income sources along with a monthly estimate for each source. Add a total line for the income. Next, list your expense items starting with those that are necessary. Include a monthly estimate for each expense item. Add a total line for the expenses. Subtract your total expenses from your total income. This is your savings.
  
  
• 6). Analyze your savings amount. If your savings is a positive number, you should be investing this amount every month into a savings account. If your savings is a negative number, your income is not sufficient to meet your expenses, identify expenses that can be reduced or find additional sources of income.