To start at the very basics it is absolutely essential to look at your cash flow, what money is coming in and what money is going out. The first part should be easy, simply list every penny of income you receive on a regular basis every month. This might be before you give up a second income to see if you can afford it, or this may be your single income that you are living on now. Then comes the slightly harder part of listing everything that you are committed to spending on every month, this includes your mortgage, car payments, loans, utility bills like electricity, cable and water. Make a full list of everything that you absolutely must pay for every month.
You should add a realistic amount for food and other essentials such as diapers for your little ones or any other costs that you have to pay on a regular basis. These are your essential monthly costs. Then simply take away your monthly costs from your monthly income. The difference between these two amounts is you disposable cash or how much you have to spend on everything else. Of course this amount might actually be negative and this is actually more often the situation for many families where you suddenly realize you can’t afford your living. But don’t worry because there are lots of things you can do to reduce the costs. The first place to start is on the list of items that you made for you essential monthly costs.
We made a great home budget worksheet. I use it every day to do my finances and budget. I think its better than any of the ones you pay for online. Ours is completely free just email us and we can send you one via email.
