Household budgeting leads to long-term financial stability

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At the end of the month, do you wonder what happened to your money? Are you regularly tempted to spend when you have a few extra dollars in your pocket? Spending and savings habits are directly linked to financial stability. Understanding how and where you spend money is important for financial success, especially in tough economic times.

One important step for managing your household budget is to formulate a spending plan for your money. Use the following steps to develop your family’s spending plan:

First, identify the total amount of money you earn for the month. This total should include take-home pay, any investment income or additional income from a second job.

Next, find out where you spend money. Start by writing down all of your expenses for one month. Typically, the big expenses, such as rent or groceries, are easy to track, but be sure to include all expenses, even small ones such as trips through the drive-thru or vending machine purchases.

Finally, develop a plan on paper for spending your money. Set aside money for big purchases, and set a limit for how much you will spend on the remaining items, such as entertainment or gasoline. Remember that for big expenses, such as car insurance, vacations or holidays, you may want to set aside a little each month so you are prepared when these events occur.

It is important to evaluate this spending plan after two or three months. Are you overspending in any specific category? If so, readjust it to more accurately reflect your spending habits or identify alternatives to help reduce expenses.

What do I do if I’m overspending?

Normally, it is easier to find small things to cut from your lifestyle rather than making big adjustments. It is important to realize that those small savings add up over time. Review your expenses and identify areas where you can reduce expenditures.

Keep in mind that stores arrange goods and merchandise to tempt you to make a purchase. The next time you are at the store, try to identify the TRIGGER that encourages you to buy, and then try to avoid these areas in the future.

Other tips for breaking poor spending habits are to limit the number of trips you make to the store. The less often you shop, the less likely you will be tempted to make unnecessary purchases. Also, make sure you have a plan before entering the store. Know why you are there, which items you need to purchase, where they are located and stick to your shopping list.

Sticking to your household budget can be a daunting task. However, after reviewing your spending habits and practicing a spending plan, you will develop your own tips and tricks for following your budget.

Source: Jennifer L. Hunter and Laura Frey

Upcoming Event:

Senior Center, Feb. 9, 10:30 a.m., “You Are what you Eat”


Cover Girls Home-makers, Feb. 9, at 2 p.m., Extension office

Carrollton Homemakers, Feb. 19 at, 1:30 p.m., Extension office


Ann Schultz is Carroll Co. Extension agent for family and consumer sciences. Call her at (502) 732-7030 or send e-mail to ann.schultz@uky.edu.