When the new fiscal year is close at hand, companies and other organizations work on their budget for the coming year. They give themselves plenty of time to get it done, reviewed, edited, and ready for final approval by the board. You may not represent a major corporation, but you do represent your family. It could be a family of one or a family of five. Either way, a budget would let everyone know where the money is actually going and make it easier to plan for future expenses.

Creating a budget is a time-consuming task. It you’ve never done one before you are in for a real treat. To make the job a little less painful, enlist the aid of the entire family. The good thing about a budget is that once all of the initial details are hammered out, it will never be as difficult again.

Start with where your money is going right now. You have to start somewhere and the best place to begin is to find out exactly where your money goes each month.

Make a list of the bills that are paid every month. If they are bills where the amount doesn’t change from month to month, this part of creating a budget will be fairly simple. The main bills for most families include: rent/mortgage, utilities, car insurance, car payment, and groceries. There are incidentals like credit card payments. If the payment is made each month, include these payments in your budget as well.

The grocery bill will have the most variability. Most families buy many of the same things each month but at certain times of the year, such as during holidays, many households tend to purchase more food more often. If you know what you spend on groceries this month, multiply that amount by twelve. This is roughly what you will spend per year on groceries if the family doesn’t get any bigger during the upcoming year.

Next, subtract the monthly salaries of the money contributors in the household from the regular monthly bill amount, including the grocery bill we figured above. How much do you have left? This dollar amount should be used for savings and extras.

Savings are important to include in a family budget. Each month you will want to put aside some money in a separate account. In a perfect world, having a savings amount equal to three times your salary would be ideal, but most people don’t have the luxury of saving that much. When determining how much to put into savings each month, be sure to take into consideration things such as the amount you have available and remember - life happens quite often. If you can’t put away as much as you’d like to each month, that’s ok. Just make sure you are growing your savings, even if only by a little bit each and every month in order to help when those unexpected expenses come up.

Software like Quicken or Microsoft Money can help those with computers to create a workable budget. The software allows you to add dollar amounts to different categories. Subcategory headings can also be used. As money is subtracted, you can check to see how much is left in that category for the month. These programs also allow the user to create reports that show how money is spent.

In the age of ATM’s, it is easy to spend without thinking. Remember to keep all receipts and subtract the amounts from your electronic or paper ledger. Money machines are a major source of missing cash that ruins a budget. Visit the ATM once a week and take out the money that will be needed for any budgeted expenses only. This way, you can keep account of what is spent without spending foolishly and regretting it later.

Though not always easy to start, budgets are a necessary part of maintaining the family finances. So, take the time to create a family budget for your household today in order to find out where your money is actually going. This will help to plug any leaks in your spending and save some of your hard earned green too.