Developing a family budget isn't the most fun activity, but it will help keep your expenses in check, reduce your financial stress, and allow you to plan ahead for emergencies. It's important to be as detailed and honest about your spending habits in order for your budgeting exercise to be useful. The goal is to determine where your money comes from, how much do you have each month, and where it goes.

Here’s how to create a budget for your family:

1. Write down all of your sources of income. Look at your last paystub to determine what your total take-home pay will be for the month. Be sure to include any income from your spouse or significant other, if they contribute to the monthly expenses. If you are self-employed or have any outside sources of income be sure to record these as well. Use a budget worksheet to help you track everything.
   
2. Develop a list of expenses. Write down all your anticipated bills for the month, including mortgage/rent, daycare, car payments, auto insurance, groceries, utilities, entertainment, dry cleaning, savings/investments… basically anything and everything you and your family spend money on.
   
3. Divide your expense into two types: fixed or variable. Fixed expenses are those bills that pretty much stay the same each month and are required parts of your way of living. They include expenses such as your mortgage/rent, daycare, car payments, cable/internet service, trash pickup, credit card payments and so on. These things, at least in the beginning, won't likely change in your budget.
   
   Variable expenses things that will change from month to month, including gas, groceries, eating out, entertainment, allowances, and gifts among others. These are the areas that will be easiest to make adjustments in your spending moving forward.
   
4. Add up your income and then subtract the monthly expenses. If your bottom line shows more money coming in then going out, you're going great. Now you just need to decide what you want to do with the excess – start or increase your investing for retirement, aggressively eliminate your debt, or save for a big purchase (new house or car). If you expenses are higher than the money you bring in each month, you'll need to make some changes in your spending.
   
5. Make any necessary adjustments. First, make sure you've correctly identified and listed all of your expenses. Your goal should be to have your income and expense columns to be equal – all your income is accounted for and budgeted for a specific expense. If your expenses are higher than your income, start by cutting your variable expenses. Once you've shaved everything you can in these areas, think about refinancing your car or house at a lower rate to save some additional money on your monthly car and/or mortgage payment. Price shop on other fixed expenses such as insurance to make sure you're getting the best deal out there. Even contact your cable provider to make sure you're receiving the best price they offer.
   
6. Review your budget regularly. It is important to evaluate your budget on a regular basis – weekly in the beginning, then on a monthly basis once you have your expenses in line. For the first several months, take the time to compare your actual expenses versus to your budget. This will show you where you did well and where you may need to improve. If you need further help in cutting your variable expenses, it might be useful to try a cash budget for a few months in order to get your finances back in line.