Creating a budget helps keep the family finances in order and allows you to put cash away for emergencies. Emergencies could be anything from a car breaking down to an unexpected hospital bill due to a car accident or a serious illness. Budgeting also helps families save for special occasions such as Christmas or birthdays.
Creating a budget has always been important, whether for single people or families, but in times of tough economic issues when there is not a lot of job security, it is even more important. Budgeting for savings may just save the roof over your head, even though that money may have been set aside for a vacation.
A budget is not only used for saving money, but for regulating other expenses. It can be used to regulate the amount of money spent on food, extras such as cigarettes and beer, football games and other extracurricular activities the family may enjoy.
You can plan a weekly, monthly or yearly budget--or a combination of all three. A weekly budget helps to show where you are spending your money each week, and allows you to see where each dollar from that week's paycheck is going. A monthly budget outlines all of the bills that need to be paid for the month, including groceries, and shows you just how much you have left over to put into savings. A yearly budget allows you to see what each month's savings add up to over the year, and may be used to budget a certain amount of money out for a family vacation.
Because people tend to spend money as they get it, a budget helps to show you where and why you are spending the money. It will help you save what you otherwise may have spent--and shows you that a little here and there adds up over time. For example, if you track your spending habits on lotto, you will be able to see what your lotto habit cost you over a month, a few months or a year.
A budget can be created on a piece of paper or in a spreadsheet. It should show all incoming income and outgoing income. Using a spreadsheet allows you to input formulas so you do not have to add or subtract anything by hand, making the budget keeping less tedious. Spreadsheets are especially effective for weekly budgeting, even if you get paid biweekly or twice a month.