Budgeting as an individual can be an undertaking at first. It can be difficult to get a handle on your regular spending habits and determine how and where your money is being spent. Keeping on top of regular bills, utilities, and other financial obligations can be overwhelming if you do not have your finances organized.
Budgeting for a family can be even more complicated – not only are you accountable to take care of yourself, but you are taking care of your family as well. When budgeting for you and your family, it is important to take into consideration your monthly income to take care of the bare necessities like your bills. But beyond that, budgeting for a family requires planning and extreme organization. Though it can be overwhelming at times, it is completely possible to effectively budget for your family, regardless of size.
Starting a Budget Conversation
When you start to consider your budget for your family, it is important to first engage the members of your family involved in contributing financially to your overall family income. This is not just limited to your partner – you may include older children in this conversation if they are working part-time or full-time jobs. It is also important to let younger members of the family know about spending expectations that arise from discussing budgets. Opening up the discussion around budgeting can help you to align with your family members on how your family money is spent, and what allowances are for individual family members and expectations for individual spending.
In discussing your budget objectives, it may be helpful to establish goals related to spending and saving money. For example, you may have a goal to build an emergency fund for you and your family over the next couple months. Consider the income you and the working members of your family bring in each month that would contribute to establishing and emergency fund and set realistic goals when it comes to saving money. After taking care of your mandatory financial obligations, how much more are you left with each month? Try to save an established amount of money on a monthly basis to meet your goals related to budgeting.
When having these conversations related to your family budget plans, try your best to be honest with the members of your family about income and spending expectations. This will help to establish strong trust in your family and lend to more productive conversations about money habits. This will also instill these values in the younger members of your family, and inspire more financial responsibility as they get older.
Creating Goals and Sticking to Them
Speaking of expenses, another important consideration to make when it comes to budgeting for your family is to identify how your money is being spent, and where you may have opportunities to change your spending habits for long-term saving and investment. By tracking your monthly expenses, you can see where majority of your money is going, and where there may be opportunities to cut down on costs. If you are spending money buying coffee on your way to work every day, consider buying a coffee machine to make coffee at home. Building up on these small changes in spending habits can have a big impact on your spending habits overtime and encourage you to find more ways to save and spend your money thoughtfully.
Some families get creative when it comes to establishing budgets. A popular method called the envelope method has been tested and proved by many families looking to get a better grasp on their spending habits. The envelope method requires you to place the money you have allocated for everyday expenses to go into an envelope each month, fully in cash. Establishing a physical cause amount encourages people to be more mindful of their spending and control any extraneous habits.
Another popular method is the 50/30/20 rule budget. This is ideal for families who may not have the time or energy to fully parse out spending expectations for individual transactions. The 50/30/20 rule requires you to track and divide your expenses into three categories: needs, wants and savings or debt. To determine a dollar amount for each of these three categories, you will have to evaluate your combined family income once taxes have been taken out. Then, you can divide up accordingly: 50% for needs, 30% for wants, and 20% for savings. This gives you more of a “big picture” look at your monthly spending.
Additionally, some families plan celebrations for when they reach their goals. Consider getting a nice family dinner or engaging in a fun family activity after you hit one of your budgeting goals. This will help to encourage all members of the family to meet their individual goals and stay on track.
Tracking Your Success
After you have discussed budgeting expectations and expenses with your family, you can start to put some of your budgeting plans into place. Utilizing an electronic budgeting tool, such as Excel or a budget tracker app, can help you establish your goals in a physical place to be referred back to in the future. By inserting your budget into one of these tools, you are able to both reflect on your established goals and track your progress in reaching them. Every time you and your family achieve one of the goals you laid out for yourselves, you’ll be able to reflect back on the hard work and effort that got you to that point.
Budgeting for a family is hard work and requires help and support from everyone. Whether you are a family of working adults, or have a lot of younger members, establishing a budgeting plan early on can be beneficial for your whole family. Regardless of age, everyone can stand to learn a few things about improving their spending habits and saving for their future.
As the younger members of your family grow and get older, they will have learned many effective ways to budget their personal finances and prepare for a family of their own. This can help to establish financial security early on and maintain it for years to come. Involving the family encourages open and honest conversations about money and spending and prepares everyone for a more stable financial future.
