Keeping Records for Family Budgeting (1271)

Getting financial records in order is like Mark Twain’s conclusion about the weather, "Everybody talks about it, but no one does anything about it."

A complete accounting of your income and expenditures can pay off at tax time, however. That puts you in a better position to evaluate your spending patterns, make changes, and plan ahead to get what is important to you.

Tracking income is relatively easy. You need to check stubs and records of savings and investments. Tracking expenses usually requires more time and patience. Researchers seem to agree that keeping track of expenses is easy if one family member assumes primary responsibility. That means other family members need to cooperate and report regularly on their spending.

One way to track expenditures is to look back over your checkbook registers or copies of checks. You will also need receipts for items you did not pay for by check. Reconstructing your expenditures month by month over the last year will help you see when regular bills come due. Expenses such as mortgage or rent payments, base utility charges, car payments, and installment loans will probably show up each month and are easier to identify.

Besides these recurring expenses, there will be others that are paid on a quarterly or semi-annual basis. Property taxes, insurance premiums, and car registrations are examples. Because they are not due each month, it is easy to miss them.

Another way to record expenditures is to keep a detailed record for several weeks of where you spend your money. Save receipts and record expenses in a notebook or account book. Record keeping for small items, especially when there are no receipts, may be easier if a set amount of money is placed in an envelope or separate coin purse and used as needed. (Examples include parking meters, bus fares, coffee at the office.) At the end of the time period, you can calculate what has been spent from each envelope or coin purse.

The moment of truth comes when you subtract your expenses from your income. If expenses exceed income, you know some immediate changes are due. If the reverse is true, look to increasing your expenditures for savings. Savings should be planned for just as you plan any other expenditure.

By studying your spending records, you can evaluate what proportion of your income is going to various necessities and luxuries. You will have a better idea of where adjustments are needed and be in a better position to take control of your financial future.

For more information on this subject, Please visit the College of Agricultural Sciences Publications Web site.

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