Manage Spending

• Family budgets help you manage spending by allowing you to start with a list of what must be paid; add to that what you'd like to spend money on, and arrange it so that everything fits comfortably. The primary reason to create a family budget is to make sure you don't spend more money than you make. The two keys to doing this are to write down the maximum amount of money you plan to spend in any given area, then write down everything you spend money on so you know where you're spending. Start with a list of regular fixed expenses such as the rent payment. Write that amount down in your budget and plan to spend it each month when the rent is due. Groceries or electricity costs vary, so it's helpful to track how much you spend on these for a few months, then write the average amounts in your budget so they're planned for as well.
  
  

Save For the Future

• Family budgets are also useful tools for saving money. Families often create a retirement fund category in their budget, then assign money to it each month as if it were a fixed bill that must be paid. By treating a future savings fund as if it were a bill, you effectively build up money because that bill is "paid" before the money is squandered on frivolous items.
  
  

Handle Emergencies

• All family budgets should include an emergency fund. Like future savings, the emergency fund should be treated as a bill; money should be allocated to it at the start of each funding period. The emergency fund money acts as a buffer to help ensure you don't blow your budget when something completely unexpected occurs. If the water heater goes out in your home, for example, without an emergency fund you'd have to take money from other areas of the budget, which can lead you deep into debt and put you behind on bills. If you already have money budgeted and set aside for emergencies, though, you'll be able to take care of the unexpected expenses without sacrificing any other bills or expenses.
  
  

Get Out of Debt

• Family budgets can be useful for getting out of debt. When you first create your budget, make a list of all your bills and expenses, including credit card payments and other debt obligations. When money is left over in the budget because the bills are less than the income, people often assign the extra funds to a fun money account or put it toward their savings. If instead you budget a little extra toward one of your smallest debts, you can pay that debt off more quickly. Once the small debt is paid, add the minimum payment from it to the minimum payment of your next smallest debt so that it's paid off more quickly as well. Continue adding the minimum payments from paid-off debts to the next debt in your budget, and you'll soon find yourself completely debt-free.