How to Gain Control of Your Finances with a Well Planned Household Budget

Are you in a financial crisis? Do you find yourself with no money, but bills unpaid at the end of each month? Do you often wonder where all your money went? If you know you have enough income to cover all your monthly expenses, and should even have a bit left over, then maybe it is time to prepare a household budget to better manage your finances.

We all learn the three basics of survival early on. They are food, clothing, and shelter. These should be at the top of your list, as well as car payments, power, phone, and insurance. In order to have a successful monetary plan, you will need to account for each and every dollar that comes into the home. A word of warning, though- always allow some cash for fun. A very restrictive budget is most likely going to fail after only a few months.

First off, before you prepare a budget, you need to know how much income you are working with. Once that is established, make a list of all of your monthly bills and list them on paper by order of importance. You need a place to live and food to eat, so the house payment and grocery bill should lead the list.

If you happen to be behind in your mortgage or rent, try to cut back on all other areas until you are current. You don't want to become homeless! Being current on your rent or home loans will also improve your credit rating.

After shelter, the two basic needs for you and your family are food and clothing. Of course, you shouldn't need to purchase new clothes every month, but try to save a little bit each month for this purpose. A lost winter coat or worn out boots can be a large hit to the pocketbook if they are not anticipated for. Also, kids grow fast and entire wardrobes need to be replaced. Your food budget will vary from month to month, depending on what staples need to be replaced. Remember to account for out of the ordinary holiday meals and special occasions. All restaurant visits should be included into your food budget, too.

Next on your list should be any other expenses needed to care for your family. These may include medications, regular doctor visits, or child support payments. Keeping your family in good health is defiantly a priority.

Be sure to make your vehicle payment on time. If your car should get repossessed, you will have no way to get to work. No work equals zero income. Be sure to include any vehicle maintenance into the monthly vehicle budget, also.

Many utility companies will work with their customers with customized payment plans. If you are truly struggling to pay today's high gas and electrical bills, most states have energy assistance programs. Postponing these bills can lead to disconnection notices, damaged credit, and high reconnection fees.

Make all your secured loan payments on time. Missing even a few payments may allow the creditor to repossess all items used as collateral. If the payment is too high, ask about refinancing options.

Credit card payments are next on the budget plan. Make at least the minimum payments, more if you are able. Over time, try to pay off the smallest balance first while making the minimum payments on all the other cards. Once the first card is paid off, add the extra amount to the next lowest until it is paid off. If you continue this plan, all your credit cards will soon have a zero balance giving you more money in your bank account.

After all your essential bills are budgeted for, you can include all the lesser important expenses. These are items that can be set aside for a month or two, if necessary. However, long term non-payment can result in balances being turned over to collection agencies. Along with extra finance charges and added fees, your credit report will suffer.

Department store or gasoline credit cards are third party cards. Delaying payment may result in loosing your card usage privileges. Most holders of these cards will accept "good-faith" payments of five or ten dollars for a few months until you are able to get back on you feet and pay off the balance,

Delaying payments to lawyers, finance companies, or even the IRS could result in law suits, but only after a prolonged period. Be sure to file late payment forms with the IRS to avoid penalties. Budget what you can as soon as you are able.

At the very bottom of your household budget list include any loans from friends and family that you are morally obligated to repay. These are the people closest to you and will wait until you are no longer struggling financially.

Hold off on renewing any type of subscription services. These include things like Newspapers, magazines, movie rentals, and even on-line services. Once you have a working budget in place these items can be restored when the money is available.

Living on a budget can be hard to get used to. Expect a few setbacks and changes for the first few months. Keep your written budget in a prominent place and mark important due dates on a calendar so they won't be forgotten. It won't be long before you begin to see the benefits of money management.

Sources:

*Matt Hamblen, "Utility Juices Up Online Bill Payment", computerworld.com/news