How To Set a Family Budget
Although we know we should know how to set a family budget, most people prefer to
hide from the term budgeting and are overwhelmed by the thought of
looking at their finances (that sounds familiar!), there are
many ways in which family budgeting can be utilized and maintained.
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Taking the time and effort to get control of your family's finances can actually free you from money stress and give you more control knowing where money is spent and when.
Making A Family Budget
Preparing a family budget can be easy -either by using a prepared, fill-in-the-blanks style computer program or paper based system - or by creating one for yourself.
First, list all the income your family receives in a month and where it comes from. Remember to use the after-tax amount!
Then list all areas of expenses - mortgage, car payments, credit card payments, various utilities, gifts, health care, groceries, etc, and plan what the average amount spent monthly for each area is. Be sure not to forget anything, catagorize small items into larger ones for simplicity if you find it easier.
After you figure out what money is coming in, and where it's disappearing each month, it's time to decide where you can cut back. What are some of the more expensive areas in your budget or extras that are draining your finances? Evaluate what you need carefully.
Important Things To Include
It is very important to create an emergency fund - in case an unexpected event or situation were to come up. This is the fallback for the times when the car needs a new radiator, the fridge stops working, the basement floods and needs pumping out, or someone loses their job suddenly.
Without this financial safety net, we are left to struggle with the long term financial effects. A recommended suggestion for how much to aim for is approximately 3 months worth of your family income. Put this money somewhere safe -where it won't be tempting to use, but easily accessible if needed -such as a savings account.
Don't forget to put money aside for your retirement, too. If you can budget a specific amount every month to be automatically withdrawn, you won't be struggling at the deadline to make your contribution and plan for your future.
Sticking to it
Once you have set a budget for your family, you have to stick to it religiously and make sure that everyone in the family does as well. Take the time to go over it with them, and re-evaluate it frequently - be that weekly or monthly. How are you doing with your plan?
A system such as putting cash in jars or envelopes every week or month can make it very easy to see what you can and cannot afford. Keep track of your purchases in a notebook, if you are worried that you are going to over spend. Watch for trends in your spending to see what is working and what is not. The key is to find a system which will work for you.
Budgeting isn't easy; but it is necessary in today's economy. No matter how hard we work, we never seem to make ends meet.
Making A Family Budget
Preparing a family budget can be easy -either by using a prepared, fill-in-the-blanks style computer program or paper based system - or by creating one for yourself.
First, list all the income your family receives in a month and where it comes from. Remember to use the after-tax amount!
Then list all areas of expenses - mortgage, car payments, credit card payments, various utilities, gifts, health care, groceries, etc, and plan what the average amount spent monthly for each area is. Be sure not to forget anything, catagorize small items into larger ones for simplicity if you find it easier.
After you figure out what money is coming in, and where it's disappearing each month, it's time to decide where you can cut back. What are some of the more expensive areas in your budget or extras that are draining your finances? Evaluate what you need carefully.
Important Things To Include
It is very important to create an emergency fund - in case an unexpected event or situation were to come up. This is the fallback for the times when the car needs a new radiator, the fridge stops working, the basement floods and needs pumping out, or someone loses their job suddenly.
Without this financial safety net, we are left to struggle with the long term financial effects. A recommended suggestion for how much to aim for is approximately 3 months worth of your family income. Put this money somewhere safe -where it won't be tempting to use, but easily accessible if needed -such as a savings account.
Don't forget to put money aside for your retirement, too. If you can budget a specific amount every month to be automatically withdrawn, you won't be struggling at the deadline to make your contribution and plan for your future.
Sticking to it
Once you have set a budget for your family, you have to stick to it religiously and make sure that everyone in the family does as well. Take the time to go over it with them, and re-evaluate it frequently - be that weekly or monthly. How are you doing with your plan?
A system such as putting cash in jars or envelopes every week or month can make it very easy to see what you can and cannot afford. Keep track of your purchases in a notebook, if you are worried that you are going to over spend. Watch for trends in your spending to see what is working and what is not. The key is to find a system which will work for you.
Budgeting isn't easy; but it is necessary in today's economy. No matter how hard we work, we never seem to make ends meet.
However, if we learn how to set a family budget early on; creating realistic and reasonable goals for our families; it can make all the difference in the future of our children and ourselves.
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