Having a large family of 6, and supporting everyone on a "lower than average" income for a family of our size means that budgeting has to be a top priority for us. Being able to stay at home with my kids means that staying on, or even better, under, budget & living debt-free is very important to our well-being. So I budget according to my husbands salary & we always try to save a few pennies for a rainy day! We always have "enough" and have never, ever gone "without".
Keep your life free from love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.”
This is how I budget for our family month by month.
1. Add up income from all sources for the month. Paychecks, side income, gvmt. supplements, etc... any and all reliable income.
2. Add up all fixed expenses for the month. Fixed bills are bills which are not optional and you have to pay. These expenses include rent, mortgage, insurance(s), hydro, gas, water, cable, phone, medical, dental, etc...
*If you have bills which are paid bi-montly, semi yearly, etc... take the total of the bill and split it up into the total months you have to save up for it. Eg: We pay for our life insurance yearly. Our premium is $432.50. Therefore if I save $36.04 monthly, in a year, we'll have enough saved and tucked aside to pay that bill.
*please note groceries, shopping, gifts, travel, beauty treatments, clothes, etc... are NOT fixed expenses.
3. Subtract your fixed bills from total income. Whatever is left after all the bills are paid, is called your variable income. This is what you have left to cover "life" for the month. Food, misc, clothing, gifts, entertainment, health & beauty, etc...
4. Savings: Some people take their savings "off the top", others see what's "left" after the bills are paid and go from there. I personally think neither are 'wrong', you need to find what works for your family and go with it. Since we live off of a smaller income, I pay our bills first and put food on the table before I figure out our savings. It may not be ideal to some, but I need to put a roof over our heads first and foremost, and food on the table before anything else. I think its great to get into the habit of saving *something* at least every single time you get paid. Even if we have a crazy tight month, you can bet I always tuck at least a *little* into our savings account!! Without a savings account, you're at the mercy of Visa or Mastercard. Not the best way to get through life.
5. We adhere to the motto "Cash is King". We do not "fall back on" credit cards or anything else. We live by cash. If we want something, we save for it and pay for it in FULL when we have saved up enough to purchase the item. We do not put it on credit and "pay as we go". If we don't have the cash for it, we don't buy it. Simple as that. Instant gratification is not all it's cracked up to be. It leads to debt, ungratefulness, comsumerism, and bad shopping habits all around if you're continually living "above your means". Eventually, you will have to "pay the piper".
Above and beyond our weekly budget, we have money tucked aside for other purposes.
Emergency Fund: Our Emergency fund currently has $5K in it. This is left alone unless it is a true emergency.
Slush Fund: Our "slush fund" covers birthdays, gifts, clothes, unexpected bills, misc. incidentals, special activities, dental & medical costs, etc... I aim to keep a balance of $3K in this savings account.
TFSA: This is our long-term savings which is building up slowly & steadily.
Christmas: We save for the Christmas season beginning in January of every year. I aim to have $1500'ish or so in this account by the fall when i'm ready to shop. This covers anything and everything Christmas related. Food, gifts, decorations, charity, etc...