Many families may view having and sticking to a budget a big nuisance and perhaps even a bit unnecessary. If they can pay the bills, they must be good at managing their expenses, right? Well, not really.

A budget is more important than a written record of the money flowing in and out of your household. It's a financial tool that can help you carve out some money for savings and investments, help you veer away from bad spending habits, and help you prepare for emergencies.

Tracking your expenses is only the first part. If you’re spending less than you’re earning, you’re on the right track. If you’re spending way beyond what you’re earning, then it’s time for a financial makeover.

The key is to map out a spending plan that suits you and your family. With allowance for treats and the occasional shopping spree, a budget shouldn’t make anyone feel deprived. More importantly, your budget should be something that you and your partner regularly evaluate and talk about.

Setting goals is also an important part of budget planning. Whether it’s saving for your child’s education, owning a home, or planning a vacation, goals keep the family motivated. If you know where you want to go, you’ll have a better idea of how to get there.

Ultimately, the goal of every budget is to secure the family’s future. The idea is to reach a level of saving and spending that the family is comfortable with and will help them build an arsenal of assets and securities.

After going through all your expenses, you may uncover some things that do your budget no good. Here’s how to go about fixing them:

(Originally published as “Budget or Bust” in the "GH Money Matters Handbook" section of Good Housekeeping Philippines' April 2002 issue. Adapted for use in Female Network. Photo by 401(K) 2012 via Flickr Creative Commons)

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