Steps to Prepare a Family Budget

WASHINGTON, Sept. 7 /PRNewswire-USNewswire/ -- "I can't invest! I spend everything I earn."

If you're spending everything you earn and never have money to save or invest, you need to find ways to cut expenses. When you realize how you're spending your money, you'll be surprised by how you can eliminate some small daily expenses that add up to a lot during a year. In order to do this, you'll need to develop a budget.

The household budget is simply an analysis of your monthly income and expenditures. The first rule for a household budget is to keep it simple. It should not be seen as a limitation on the control you have over the money, but rather as a guide that allows you to know where the money you earn every month is going. Once you have developed the budget, the second rule is to be disciplined and abide by it.

In a household budget you'll find areas for savings, since you'll have a comparison between your expenses and your income. The result is the profit or extra money that you have every month. What to do with that money is your decision. Nevertheless, it will also be useful as you think about making any changes in order to achieve a financial goal (university studies for your children, retirement, a house). Let's see.

First, compile your credit card statements, checkbook, receipts for all your purchases, including supermarket expenses and anything else you pay with cash, check, or credit card.

Then, on a sheet of paper or in an Excel spreadsheet, write down your monthly income, including any other income such as Social Security, pensions, child support, supplementary jobs, etc. Next, write down your fixed expenses such as bills due on specific dates or that are recurring, e.g., housing (rent or mortgage, second mortgage, or line of credit), debt repayment (car or personal loans, credit cards) insurance (house, car, life), family (tuition, child support, alimony, child care), and contributions.

Then, write down variable expenses, which are the ones that occur regularly but in varying amounts, such as transportation (fares on public transportation, gas, car repairs), food (supermarket, lunches, snacks), services (gas, electricity, water, telephone, cell phone, etc. credit card fees, personal needs (hairdresser, personal grooming items), health care (doctors, medicines).

Lastly, write down flexible expenses, which are the ones for things that you "want," instead of the ones you "need," such as clothing, entertainment, gadgets, subscriptions. Here is where you'll be able to make adjustments or take them off your budget in order to find money for something else. Once you have all this information you'll be able to evaluate what you can cut in order to begin saving. It doesn't matter how little, the important thing is to begin.

For more information and examples on this topic see "Resources for a better financial future" in the Web site of The Aspira Association http://www.aspira.org/. This publication was made possible by a generous grant from the FINRA Investor Education Foundation.

FINRA Investor Education Foundation

The FINRA Investor Education Foundation, established in 2003 by FINRA, supports innovative research and educational projects that give underserved Americans the knowledge, skills and tools necessary for financial success throughout life. For details about grant programs and other FINRA Foundation initiatives, visit www.finrafoundation.org.

SOURCE ASPIRA Association