I confess that I’ve never actually created a budget for my family. I’ve started budgets a few times, but never made it even half way through. Patrick over at A Loonie Saved describes an approach to family budgeting that seems less painful than what I tried to do. He begins with what he calls descriptive budgeting and evolves into prescriptive budgeting.
What I have done for my family a few times over the years is some financial forecasting. I looked at our spending patterns, income, and one-time expenditures at a very coarse level to predict how much savings we would have a year or two later. This is similar to Patrick’s descriptive budgeting, but I suspect that my analysis was much less detailed.
If you’re looking at your budget for the purpose of estimating future savings without trying to change your spending habits, you don’t need much detail. If I always take $400 out of a bank machine each month, it doesn’t matter what I spend it on unless I’m trying to reduce this spending.
I definitely recommend starting with forecasting your family’s future savings. If you’re like my wife and me (cheap?), you may find that you’ll be fine in a year or two if you continue spending as you are now. If you’re prone to being vaguely worried about finances, this can be reassuring.
If your predicted future savings aren’t what you’re hoping for, you’ll need to add more detail to your record of spending patterns to get to Patrick’s descriptive budget. This will give you enough information to choose a few areas to reduce spending.
If a few adjustments aren’t enough to save your finances, you may be a candidate to be on Gail Vaz Oxlade’s television show Til Debt Do Us Part. She will have you giving up credit cards and storing cash in jars to control your spending. Overspending has to stop sometime, either with the jars or with bankruptcy.