How to make a family budget in 4 steps
- Income: add every take-home paycheck in the house for a month.
- Fixed expenses: rent, insurance, car payment, phone. Look at last month's bank statement.
- Variable expenses: groceries, gas, eating out. Average the last three months.
- Compare: if the leftover is negative, cut wants first; if it is positive, give it a job (emergency fund, debt, savings goal).
Healthy guidelines
- Housing at or under 30% of take-home income.
- Emergency fund of 3 to 6 months of expenses.
- Total debt payments (excluding mortgage) under 15%.
Do not forget irregular costs
Car registration, birthdays, holidays and back-to-school show up every year. Divide their yearly total by 12 and add it to "Everything else".