Many people associate budgeting with the act of cutting back on spending. While this is certainly one aspect of budgeting it is not budgeting in its entire sense.

Budgeting is primarily about keeping your income and expenditures organized to ensure that you are spending within your means. Many people may shy away from creating a household budget because they consider the task complex, but this is not necessarily true. Here are six easy tips to keep things simple and help you get on a path to creating your household budget.

1. Keep it simple.

The biggest mistake people make when starting their budget is that they do not keep it simple. The task becomes burdensome and overwhelming, and they quit. Start your budget with broad categories. Do not get bogged down in the details. Once your broad categories are mapped out, break each of those categories down. For example, you may first create the broad category of “Entertainment” and assign a dollar value to it. When you come back to break it down, you may include “Eating out” and “Family Recreation”. Take the dollar value amount you allotted to entertainment, and divvy it up among the subcategories in a way that makes sense for your family. Some common examples of large household budget categories are:

• Mortgage or Rent
• Vehicle or Public Transportation
• Utilities
• Groceries
• Education
• Credit Cards
• Entertainment or Extracurricular Activities
• Emergency Savings
• Retirement Savings

2. Keep it realistic.

While you may have dreams of saving money by growing and raising all of your food but you currently eat out twice a week because you’re a busy family. You need to budget money for eating out because that is your current situation. You should create your budget for your current habits to make it realistic and practical. This does not mean you cannot improve your habits or lifestyle, but new habits take time. If you have incorporated new habits over the year, it’s a good idea to adjust your budget during your annual budget review the following year.

3. Budget an emergency fund.

No matter how well you plan your budget or curb your shopping habits, there will always be something that happens that has not been put into your budget. These unplanned occurrences can be anything from a medical emergency to a car repair that is needed. Rather than waiting for this to happen and blowing your budget when it does, a better solution is to build an emergency fund into your budget right from the start. When you do that, you can easily cover any unforeseen expenses easily without destroying your budget. Be sure only to tap into this emergency fund when it is a real emergency. It should not be used to expand funds in another category.

4. Track your income and spending.

Obviously when adhering to a budget, it is essential to keep track of what you have coming in and what you’re spending. Otherwise, how will you know if you’re on track? There is no right or wrong way to track your spending. You can use anything from a pen and paper ledger to software such as Microsoft Excel. They even have online budgeting services that provide tracking tools. Some such sites are www.mint.com or www.budgettracker.com. Keep in mind that there is no right or wrong way to track, and often you do not only have to choose one single method. Do what feels most comfortable for you.

5. Be ready to make sacrifices to create balance.

There will be times as you’re living within your household budget that you will realize you have overshot in some areas and need to make up the difference. This will require you to cut back in other areas to stay on budget. Prioritizing is important at this point as your emergency fund will be the area that you feel most comfortable taking from but realistically should be the last place you look to borrow.

Any extracurricular or entertainment

money should be the first to be pinched. Even categories as important as your food budget can be tweaked to make up the difference when needed. Eating less meat and more rice and beans, for example, could help save a pretty penny when in a pinch. Making adjustments and cutting back to stay on budget is necessary. 6. Bring in additional income.

When it comes to income being brought into the household, most people simply rely on their paychecks or retirement plans. The truth is, extra income can be earned quite easily by getting a part-time job, doing freelance work from home or even selling crafts. Whether your talent is sewing, painting, or writing, there is a need and a market for your talent. What if you’re not a crafty person? You might be wondering. Simply having some spare time can give you the opportunity to make money. Spend a couple hours a day watching children, clean somebody’s home or perform simple yard work like cutting grass or pulling weeds. Service jobs are easy to come by, and while they may not make you rich, they will certainly help increase your income and make it easier to save money and stay on budget! So there you have it, six valuable tips that will help make creating your budget a breeze! What are you waiting for? Stop dragging your feet and begin making your household budget today.

Maintain Your Budget With Budget Reviews

While it is common for households to make a budget, it is quite another story when it comes to adhering to it and maintaining it. For a household budget to be effective, you must keep it updated. Think of your budget as a living document; one that must grow, shrink, evolve and adapt according to your family situation. Elements such as family size, employment, housing and spending habits will affect your budget and how well suited it is for your families lifestyle.

The best way to keep your budget relevant and effective is to perform a budget review. A review will let you know if you’re on target or overspending in some areas and where you need to beef up or cut back in others. Some people prefer to do them annually while other people swear by quarterly budget reviews. However often you choose to do it, make sure you do it consistently. Here are some helpful tips when performing your annual, semi-annual or quarterly budget review.

Do your review on the same date(s) every year.

Keeping your review on the same date or dates every year will help you create a habit that will bring about a sense of ease as time goes on. Planning your review around important days or holidays (such as Christmas, tax time or even your birthday) will help to reinforce your memory of those dates. Once your review dates become part of your routine, you will no longer stress about the upcoming date.

Include your family in the budget review.

It is vital that you include your family and most assuredly your partner in the budgeting and review. Everybody must be aware of what the household budgeting goals are and have the presence of mind of where spending needs to be limited. Keeping everybody involved means that everybody is helping to make, revise and utilize the household budget.

Review your income and expenditures.

Are you bringing in more or less income? During your review, adjust your budget accordingly. Preferably if you are bringing in additional income, you will be putting additional money into savings. If you are bringing in less income, discuss where you can cut back. Perhaps you can purchase the smaller cable package or eliminate it all together. Have your debts or expenditures increased or decreased? If debts have increased, discuss restructuring your budget to pay off small debts quickly. If your expenditures have increased, consider if those expenditures are necessities and figure out what you may be able to eliminate or decrease.

Double your benefits with a brief insurance review.

You may be wondering how insurance coverage is even remotely related to a budget review. The premise is really very simple. You see, being over-insured will create an unnecessary expenditure every month and being under-insured will cost you big money, that you likely don’t have, if disaster strikes. Quickly assessing any changes in your circumstances and reviewing your amount of coverage will take a little time and potentially save you a lot of money. Determine if any pertinent life circumstances have changed. Is your family larger or has your occupation changed?

You may want to reassess your life insurance coverage. Have you renovated your house, or has the housing market changed? Take a fresh look at your coverage and make sure that you are adequately insured to replace everything in case of a total loss. Another thing to consider is disaster-related coverage. Are you covered in case of fire, flood or earthquake? Should you be? Staying adequately protected will help you stay on a budget even when the worst happens.

Keep your goals in mind.

When creating a budget, more often than not there is a goal in mind. Perhaps your goal is to beef up your retirement fund or to create a substantial emergency fund. Maybe you are saving for a down payment on a home or trying to dig out of debt to become debt free. Whatever your goal is, a budget review is a perfect time to assess if your budget is helping you move towards your goals. If it is not, make the proper adjustments necessary to put you on the right path.

Your family’s financial state and goals will regularly shift, and your budgeting target will change from time to time. This is the reason that a budget review is not only necessary but also vital. It is important to perform a regular and consistent budget review to maintain a healthy financial lifestyle.

Building your Emergency Fund

It’s recommended that you have a 3-6 month emergency fund set aside in case of job loss or illness. If you are just getting started, putting aside that much can be daunting. Here are some ideas to get you started:

Save your income tax refund—use the extra money from your tax return to get you a great start on your savings.

Cut back on movie trips and other entertainment—look for free concerts and community events to attend, or sign up for online movie subscription sites to cut costs.

Set weekly and monthly goals—saving even $20 a week can make a real difference over a year.

Budget now to cut holiday spending—think about hosting holiday events at your home rather than traveling to save travel costs. Draw names or set a limit on gifts to reduce the number of gifts you’ll need this season.

Cut down on groceries—a few times a week plan simple meals like pancakes, or soup and sandwiches to add to your savings.