Each family should have a household budget planner that they develop together, and most importantly stick to. The planner is a financial balance sheet for your home – with expenditures and incomes projected forward for the budget period. My family has a fortnightly budget planner, but that's because our income and expenses are based around that timeframe. If yours is more workable for a monthly period, or a weekly timeframe even, then use that. The most important thing to keep in mind when you're making this planner is complete honesty with both expenses and income – you're only fooling yourself and your family if you're not bluntly honest with these things.

Do not underestimate your expenses

This is vital. If your budget is going to hold up at all, you need to be completely transparent with expenses. That means there can be nothing hidden from other members of the household. I won't apologise for that either – if you can't be honest with members of your family then you need help with more than just your budget. Think forward in time and try and anticipate for unusual expenses – your kids wanting to go to the movies with friends for example – and factor that in. Try and remember all the nitty gritty expenses like car repairs, transport costs and birthday gifts – it might seem silly but budgeting for these expenses will save you heartache and stress in the long run.

Do not overestimate your income

This is really easy to do, especially if you or someone else in your household is a casual worker and the income regularly differs. My rule of thumb in such situations is that it's better to underestimate your income than overestimate it – that way you avoid potential nasty suprises. Also – please don't forget to include income from sources such as child support , occasional of seasonal work, and any form of government payments you may be receiving such as parenting payments. Your income must match reality – and often once you add all those sources of income together you have a warm fuzzy feeling of achievement. That's great, but remember the expenses?

Income – expenses = your financial position

Once you've identified your income and expenses, it's time to pair the two. Take your income, subtract your expenses and then look at the remainder. If you have a number without a minus in front of it, you're probably not doing too badly in that you're living within your means – but probably can do better. If you end up with a number with a minus in front of it then you're like a lot of other people the world over. You're living beyond your means – that is you spend more than you earn, and it just can't keep going on like that.

Your household budget planner will be a lifesaver, no matter what your initial impression of your financial position is. Remember that companies running at huge losses can be turned around and become profit generating machines – it's the same with your family budget. Trim the expenses, nurture the income, and soon your family finances will be rosier than ever. It's never too late to change your spending habits, so take the first step towards improving your family finances by compiling a household or family budget. Enjoy the experience, it can truly change your life.