It's better to underestimate and have money left over in the end than to overestimate and be left empty handed
There are plenty of honest people out there making concentrated efforts to change their financial lives. Sadly, though, these efforts are not always met with results. With a realistic outlook, however, you can all but ensure the steps you take will be met with improved financial health.
How much do you have coming in?
The answer to this question is extremely important in trying to organize a workable budget for you and your family. If you truly want to gain something from this experience, it's time to be honest with yourself and accurately estimate how much is coming into your bank account on a regular basis. Be sure to take taxes into account, and if your income is somewhat flexible be conservative. It's better to underestimate and have money left over in the end than to overestimate and be left empty handed.
Expect the unexpected
While it's important to have the usual categories outlined in your budget, groceries, rent, insurance, utilities, etc. it's just as important to include categories that more often than not will be left empty. This is because when those categories are not left empty, they are usually filled in a significant way. By saving in an effort to tame these unusual events, you can be prepared when they come. Try putting money away for car maintenance, so that when something comes up later, you aren't left scrambling. It's a good idea to also save for unexpected medical situations. If you have enough saved to cover your insurance deductible, you'll be in a better position when it comes time to pay it.
How are you with cash?
For some people, cash is the easiest form of payment and much preferred over automatic withdrawals, writing checks or credit card payments. For others, the author included, cash is a financial trap. With so many transactions taking other forms today, cash can sometimes feel like “free money” and can easily be whittled down. Don't let seemingly small transactions add up without your knowledge. If you do deal in cash, be sure to track it just like you would any other form of expenditure.
Write it down
As with any other goal, or financial goals and your plans to achieve them, namely your budget, will be more effective if it is written down. Studies have proven that this is the case with most any goal. The act of writing your goals down helps establish a feeling of commitment, and written goals are less likely to be adjusted when minor issues come up.
Along with the other categories you have listed in your budget should be a category for your savings account. You should be aiming for a zero dollar balance on your budget sheet at the end of the month. This doesn't mean that you are left with nothing. Rather, it means that you know where your money is going, all of it. Don't allow for loose ends.
After having used your budget for a short period of time, you should look it over and consider making a few revisions. Make your category estimates more accurate by making them match what you actually spend. Consider ways to trim down your spending in certain areas and follow them up. If you notice after having tried out your budget for awhile that you need to add more categories, do so. When adding more categories, however, be careful not to overdo it. If tracking your spending becomes too much of a chore, you may find yourself “forgetting” to do it or becoming to busy.
Your budget ought to match your needs. This means it should help you track and lower your spending by including categories that are useful for you. It also means that your tracking methods should meet your lifestyle, if you find yourself taking an hour each evening to enter in your purchases, you should consider making a change. Your budget should be there for the long haul, but if it's too hard for you to make it work, it won't be successful. Consider using a computer program to make things easier. Set goals that are doable for you, and you'll be likely to reach them. When you realize your short-term goals, your long-term ones will become attainable. Before you know it, you'll be enjoying success.