It is relatively easy for singles to create a budget. They can easily assess how much money is coming in, and they can track their own expenses. They only have to worry about their own decisions. But when it comes to planning a family budget, things will start to get more complicated.

Nearly all families have multiple sources of income. Usually families have multiple spenders and things become much more confusing. This is one of the most important reasons that families lack a formal budget to stick to. But having a budget and sticking to it can greatly improve a family’s financial outlook.

Creating a family budget may be difficult, but it can be done. Here’s how.

1. Keep track of all income. If a certain source of income fluctuates from month to month, use the lowest amount or average it out.

2. List all expenses for a month or so. Keep all of your receipts, and ask all family members to turn theirs in to you each day.

3. Calculate carefully your monthly expenses. Be sure to include bills, debt payments, groceries, and everyday expenses such as lunch money and transportation costs.

4. Involve your family in discussions about ways you can trim the budget. Getting input from other family members will help you decide which expenses are essential and which ones could be cut down or eliminated. Maybe you or your spouse could start taking lunch to work instead of eating out, or maybe the kids can drop an extracurricular activity.

5. In addition to individual expenses, talk about how you can cut down on the electric bill, groceries and other necessary family expenses. Think about such things as carpooling or taking public transportation, buying more generic foods and adjusting the thermostat.

6. Calculate approximately how much you can save on ordinary expenses, and cut the completely unnecessary items out of the budget. Then refigure it and see where you stand.

7. Add to the savings if you end up with a surplus, or at least allocate a portion of it to savings. If you’re in the red, go back and rewrite the budget until you have more income than expenses.

Being Realistic about the Family Budget

One important reason that family budgets often fail is because they’re just not realistic. It’s nice to cut down on expenses, but every so often we tend to go too far. For example, cutting entertainment out of the budget completely might appear to be good on paper, but we all need a little recreation every now and then.

You need to find a way to lower the cost instead of cutting such things out of the budget completely. Going back to the entertainment example, maybe you’ve been going to dinner and a movie as a family twice a month. But eating in and renting a new release would be much cheaper, and you would still get to spend quality time together.

Individual expenses can also be risky. This can be resolved by allocating a certain amount for each family member to spend each week. If someone spends his entire amount before the week is up, reevaluate his expenses and adjust if necessary.

Creating a family budget plan and sticking to it can help keep spending under control, leaving more money to pay down debts and save for the future. But in order to be successful, close monitoring is crucial. Your efforts will be rewarded, however, with less financial stress and more money in the long run.