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Credit can be your friend or foe - It's up to you to make it your ally. Abusing your financial limits can be disastrous for you and the household. Financial planning for a family starts with household budgeting. Living on a budget can be tough at times - but it's worth it when compared with the stress of a credit trap. Personal budgets can help you draw a balance between income and expenses and take care of savings at the same time. Astute home budgets will ensure that you put aside some money into the family kitty for a rainy day.


Personal finance budgeting
Personal budgets are schedules of income and expenses. They serve the purpose of documenting the money that comes in and how it gets spent. It is wrongly assumed by some that personal finance budgeting is all about denying yourself any cravings or luxuries. Personal budgets go a long way in building household wealth. Personal finance budgeting or home budgeting must take care of the following factors:

  1. Housing costs such as rent or mortgage, utilities, telephone and property taxes.

  2. Transportation costs involve automobile loan payments, car maintenance charges and gas. It also extends to toll payments, parking fees and tickets. If you do not own a vehicle, the cost of public transportation must be taken into account.

  3. Taxes such as federal, social security and professional must not be overlooked when chalking up the personal budget.

  4. Healthcare costs a lot these days. Account for premiums, medication, dental fees etc. when drawing up the personal finance budgeting.

  5. Loan payments such as automobile, credit cards, overdrafts and even personal loans from friends and family must be taken into account for any personal budget planning.

  6. Don't forget the recreation and entertainment expenditure. Any household budget must account for restaurants, movies, concerts, golf, bowling, video rentals, magazines and other discretionary expenses.

  7. Any parent would vouch for keeping aside a portion of the home budget for the kids - diapers, day care, clothes, toys, schooling and baby sitters cost a lot.

  8. Personal expenditure is another important segment. This includes clothing; make up, fitness clubs, hair stylists and the like.

  9. Vacations, whether they are local camping jaunts or a longer holiday need to be accounted for in the household budgeting scheme.

  10. Don't forget your savings so that you can be assured of long-term savings.
  11. The Emergency money fund is critical. One cannot foresee a major car accident or personal injury or even getting laid off at work.

Family budgeting
It is easy to succumb to the credit trap of easily accessible credit cards. Plan your household budget so that you can meet your expenditures as well as save for your retirement. Household budgeting will relieve you from the uncertainty of living from paycheck to paycheck. A well-planned family budgeting system can go a long way in ensuring financial security.


  • The first step of any household budget or personal budget is to list the monthly income from all sources. This can include paychecks, side jobs, alimony, child support and other income.

  • A list of monthly expenses needs to be charted out to ensure that you live within your budget. Typical family budgeting includes housing, food, transportation, utilities and entertainment. Tracking monthly household expenses over a few months can help you gain a clear reflection of your spending patterns.

  • The first step towards family budgeting is to ensure that the income covers all estimated current expenses. Expenses can be adjusted by reducing discretionary spending and making good any possible deficit.

  • An emergency fund is critical to any household budget. You cannot predict a sudden illness or a major automobile repair.

Advantages of household budgeting
Household budgeting can save you considerable financial stress. Living within the budget can extricate you from the viscous cycle of debt and growing interest. Household budgets also allow you to plan your savings, which will pay rich dividends at a later stage in life. This also provides a financial cushion during unforeseen emergencies. Efficient budget for household expenses can help you achieve the financial goals that you have set for the future. This could range from an exotic trip or college education. Debt reduction is a definite reality with astute personal budgets since they inculcate a disciplined pattern of spending.


What can go wrong with your home budgeting?

  1. People tend to set budgets but overstep them in impatience. Sticking to the planned home budget involves considerable amount of financial discipline.

  2. Succumbing to the temptation of the plastic card can get you into a credit trap.

  3. Setting up a personal budget or home budgeting pattern without any flexibility is impractical. It will invariably fail since any home budget must take care of small allowances. Changed circumstances such as another baby in the family or broken appliance or emergency trip should not upset your home budget totally.

Living on a budget
Living on a budget involves making your money stretch as far as you can. It involves keeping a tight rein on expenses, when there is still a week left for payday and the checkbook shows an empty balance. Living on a budget involves the following:

  • Planning the spending pattern in advance

  • Knowing where your money goes

  • Knowing how to keep your money longer

  • Keeping within your credit limits

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