Tips to Better Manage Family Finances: Saving & Spending

Before you start, consider the budgeting method that most appeals to you. You don’t need expensive software to create a budget. Do you prefer pen and paper, an Excel spreadsheet, or an online calculator? Many free online budgeting tools, including PenAir’s free Money Management, can help you easily create a budget—and will even send you monthly bill reminders and updates.

Record your expenses.

A smart first step is to identify your expenses. One popular way to do this is to record your family’s daily spending for a month. This will give you a realistic picture of what you spend and where. Ways to track spending can include keeping receipts in an envelope, writing down purchases, or recording expenses in a computerized spreadsheet. Whatever you do, make sure you track every single purchase and categorize it—whether it’s a need or a want, and whether it falls under groceries, utilities, healthcare, and so on. Whichever budgeting method you choose, it’s good to have hard numbers in mind as you work.

With information on your spending habits in mind, work backwards to create your budget. To start, dive in and get your numbers down. Deduct any savings needs first, such as an emergency fund, college, or retirement. Then deduct remaining expenses, such as housing, transportation, food, and other need categories, based on the monthly expenses you’ve recorded.

If possible, leave some “wiggle room” for unexpected expenses, such as car repairs or veterinary bills. Try creating a separate “surprise!” category and allocating a fixed amount to it each month or rounding up dollar amounts on categories that may change from month to month. Any remaining income can be put towards saving or personal expenses (the things want but don’t need, such as nights out at a movie or restaurant).

Share the commitment.

If your family, spouse, or partner isn’t already involved in the budgeting process, share your budget draft and ask for feedback. Based on their input make adjustments as needed and get everyone’s buy-in on the budget allocation and their commitment to sticking to it.

Make an action plan.

If you think you’re overspending, consider ways to cut expenses or increase your income. Many people choose to cut daily luxuries (such as lunches out) or pare back monthly expenses (for example, choosing a less-expensive cable plan). Even small savings add up over time and can make a difference to whether you make, or break, your budget.

Questions? We are a great resource. Call us at 850.505.3200 about products and other ways to help you maintain your budget based on your resources and life needs.