In a perfect world, money would grow on that oak tree in your front yard. You would never need to worry about saving for college, paying off your mortgage or even finding a spare $20 bill for your daughter to take with her to the movies. However, this isn’t a perfect world, and in order to juggle all of the expenses faced by your household you need to set a budget.

Unfortunately, far too many families assume that budgets are too difficult to set up and follow to be worth their time. Heck, even we refused to draft a budget until our girls were pre-teens. In reality, though, staying on top of your finances is much easier than it appears – and the earlier you start, the better off you’ll be. So if you don’t have a budget for your family yet, here are a few tips you can use to create one today.

1)      Account for everything. This first step to creating a good budget is to compile an index of your house’s income and all of its expenses. You need to know exactly how much you’re earning and where every dollar of every paycheck is going. Since you probably don’t want to track down all of your receipts and pay stubs, I highly recommend using financial management software that automatically tracks your cash flow. is one popular and free service that will do just that. However, if you have a bunch of different sources of income or you own your own business, you might want to use more comprehensive system like Quickbooks. Though it’s commonly used as business or church accounting software, it’s not hard to customize the program to meet the financial needs of your family.

2)      Set your goals and limits. Now that you’ve got a complete breakdown of how your family spends its money, it’s time to start setting goals and limits. Think about what you want to save up for – like retirement and a college fund. Take action towards achieving these goals by opening appropriate accounts, such as savings account or CD account and a Roth IRA.  Then, set boundaries on your spending so that you can deposit a certain amount of money into these accounts each month. Allocate a monthly budget for groceries, bills, leisure, school expenses and everything else.

3)      Get your family involved. A family budget should involve your entire family. Sit down with your spouse and children and talk about how and why you’re cutting some expenses, and explain the reasoning behind them – you’re cutting back on restaurants so that you can go to the Grand Canyon this summer, etc. Get your family to help you plan and give them a chance to justify their expenses, that way nobody is left feeling like they got the short end of the stick. Remember that this is a great opportunity to teach your kids about financial responsibility and healthy spending habits.

4)      Cut back where you can. Once you’ve set your budget, look for ways to stretch your dollars further by cutting costs where you can. Consider using coupons when you shop for groceries, purchasing generic brands instead of name brands. You can find a great list of cost-cutting ideas over at Family Circle. It might be tough, but every dollar you save can be put towards paying down your debt or saving up for a family vacation or college.

Believe it or not, all of your financial dreams can become a reality as long as you budget for them. So if you don’t have a budget set for your family, use these tips to help create one today. It might not be the most fun thing in the world to do, but when you’re relaxing on a beach in Hawaii or watching your kid graduate college without debt, it will all be worth it. Trust me.