How to Calculate a Family Budget

by A. Low

There doesn't need to be a stigma attached to family budgeting. If you've tried and failed to develop a budget in the past, it only means you haven't found a system that works for you yet. Your budget can be as elaborate as a template in a budgeting computer program, or as simple as sitting down on occasion with a pencil and paper to make sure you're not spending more than you make. Whichever path you take, you will calculate your family budget the same basic way.

Determine your monthly income. Multiply your take home pay by the number of pay periods you have in a year, then divide that amount by 12 to find your monthly income. For example, if you get $500 each week, multiply that by 52, which is the number of times you get paid each year. This comes to $26,000. Then, divide that number by twelve: your monthly pay would be $2,166.

Break down your necessary expenses into their monthly costs. While this includes obvious costs like your mortgage, utilities and food, don't forget about occasional expenses like auto maintenance, doctor's visits and insurance. Add all of these up and divide them by 12 to see how much you require each month for necessities.

Estimate the monthly cost of leisure expenses. Include the cost of dining out at restaurants, cell phone and cable bills and holiday expenses.

Combine your average monthly necessary expenses with your leisure ones, and subtract these from your monthly income. If the number is positive, this is the amount of disposable income you have. If the number is negative, you are spending more than you earn.

Multiply your monthly disposable income by 12 and divide by 365 to find your daily disposable income. Keeping this amount in mind each day can help keep you from overspending without having to meticulously track every daily family expense.

Tip

  • Identify goals and write them down, such as saving up for a down payment on a home, setting aside enough money for a big family vacation, or paying off a credit card. Your goals will help you stay on track with a budget because they give you something tangible to work towards.

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