Financial independence is an important part of this personal foundation. Achieving this goal requires a firm, steady hand, especially if you have a spouse and children—so no matter how annoying it may seem, you must make the effort and take the time necessary to keep on top of your household finances. Otherwise, you could end up jumping off the fiscal rails and miring yourself in a pit of debt that could take you years to work your way out of.

Though it requires some work, managing your family budget doesn’t have to be terribly difficult. As with driving a car, once you’re on your way you just need to pay attention to the road, make course adjustments here and there, and add fuel as necessary. Make your plan as simple as possible, and keep an eye on the bottom line—the monetary gas gauge, if you will.

The Basic Math

The mechanics of building a household budget boil down to a simple equation:

Household Income – Household Expenses = Household Savings

Clearly, if your income exceeds your expenses, then you’ve got a surplus on your hands. If your expenses outweigh your income, you’re running a deficit. National governments may consider the latter acceptable, but for individual households, “deficit” means “trouble.” If you find yourself in such a state of affairs, jam on the brakes, pull over, and start making emergency repairs to your budget right away.

To get back to a positive result, you’ll need to cut costs, increase your income, or both.