If you’re not good at maintaining a household budget, you’re not alone. Many families operate without a spending plan, and even those who think they are budgeting may not actually be doing so. The budgeting process involves more than simply recording receipts and taking stock of spending habits. The following are some crucial steps for making a family budget:

Bring Both Partners Together
Have a discussion with all decision-makers in the house to hash out shared and individual financial goals. Both partners need to understand and accept that compromise may be necessary to create a budget that works for the entire household.

Create Goals
Whether your budget succeeds or fails could depend largely on whether it aligns with your personal and family priorities. Decide together what is important to your household. That could be one parent staying home to raise children, an early retirement or extensive travel. If it’s realistic, create your budget so it will funnel money toward that goal.

Track Income and Expenses
Before you can write a budget, you need to understand your current financial situation. Begin by tracking or reviewing 60 days’ worth of transactions through your bank and credit card accounts. This will be crucial to identifying what money gets lost in your household’s “black hole”.

Evaluate Your Current Situation
As you track expenses, place them into categories that make sense, such as housing, entertainment, dining out and debt payments. Once you know how much you spend in each category, determine which expenses are fixed and which change throughout the year. It’s also helpful to identify which categories are discretionary, meaning they cover expenses that are nice but nonessential for your family.

Trim Costs
If spending in one category is too high or if there is no money left over for savings or debt repayment, it’s time to trim expenses. Dining out tends to be a drain on many budgets. Menu planning, shopping sales at the supermarket and buying items in bulk can all reduce the cost of groceries and make it more economical to eat at home. Cable, subscription services and impulse purchases made online are also low-hanging fruit when it comes to reducing household spending.

Build Savings
Savings should be a top priority for any money left over after monthly expenses are paid. While it may be tempting to focus on paying down debt first, an emergency fund is equally important. Keeping enough money in savings to cover three to six months of expenses is a common rule of thumb.

After an emergency fund, retirement is the next savings priority. Workplace 401(k) accounts and IRAs offer tax incentives, making them a good spot to deposit money for retirement. Many employers will match employee 401(k) contributions up to a certain percentage, and workers should contribute at least enough to their retirement plan to receive the entire match. AllCom offers its members retirement options as well. Click here to learn more about Traditional and Roth IRAs.

Get Out of Debt
Part of the budgeting process is balancing the need to pay off debt with the need to save for the future. While having an emergency fund is important, it may be best to shift your focus to debt repayment after that. If a debt charges higher interest than savings would yield, it may be better to pay down debt than boost savings beyond what is necessary.

Some debt, however, comes with tax advantages – Up to $2,500 worth of student loan interest can be deducted from federal income taxes, and mortgage interest can be included on itemized deductions.

Check in Frequently
Once completed, a budget should serve as a road map for how a family plans to spend its money going forward. To be effective, it should be consulted frequently to ensure actual household spending is in line with what is written. As family circumstances or priorities change, the budget can be adjusted.