It is amazing how much money can disappear through unplanned and unnecessary purchases. A fancy dinner here, a weekend getaway there and a family budget can fall deeply into the red. If you take the time to become aware of how much money you spend, however, you can live a surprisingly comfortable life and still have extra money socked away for a rainy day.

Money Coming In

Find out what your monthly take-home is. Include any money contributed by any member of your household on a regular basis. This includes not just paychecks from the primary earner but also money from recycling bottles, dividends from investments, and money from after-school and part-time jobs. It does not include money you can't depend on regularly such as cash from selling a car. If a job is seasonal or not very secure, you may include it provided that you revisit your budget when that job is finished.

Money Going Out

Record all of your monthly expenses. Make sure all your family members collect receipts or keep a record of literally everything they buy for at least a couple months. Your expenses include essentials like food, rent, utilities, car repairs and gas, school supplies, health insurance, doctor's visits, and laundry and house-cleaning supplies. It also includes non-essentials such as classes and memberships, new clothes, eating out, seeing movies and other assorted expenses. You should also budget out what you expect to have to pay on taxes and divide that quantity by 12 to get your monthly tax expenses. The same goes for family vacations.

Balancing the Budget

Subtract your monthly expenses from your take-home to get your surplus. Ideally, you should end up with a little bit of surplus money to put into savings every month. If you do have a surplus, divide it up between reserve cash for emergencies and money for college, retirement and other long-term investments. If, on the other hand, your take-home is less than your expenses, you have a net loss. You will have to reduce nonessential expenses. Realistically, evaluate what you don't need to spend money on. You may be able to cut out shopping for new clothes, eating out a couple of times a week or other simple luxuries and save hundreds every month.

Source:

Lifetosuccess.com: The Family Budget Process