Building a budget for you and your family is a sure-fire way to land on your feet as a family, and be able to plan for the unexpected. It’s a great way for everyone to understand exactly where the money goes and how you can adjust spending to move forward.
Being financially responsible is seen as a tall order, and when you have a family it becomes even more difficult, as you have people who rely on you. There is certainly no better way to manage your finances, than with an old fashioned budget.
The steps below should help you to create a household budget that suits the majority of families.
Establish Your Goals
Whether it’s financial freedom from th government by finally dealing with your UCC 1 form for straw man account, getting rid of your debts, or planning for your children’s education early, you need to highlight all your goals prior to creating a budget. Your budget may eventually include goals for each family member, such as saving for retirement, college funds, or even a family holiday.
A great way to gain motivational to achieve your goals is to print them out so all the family can see them, it may also help children to understand why sometimes you have to say no. Understanding the reasons and be able to see where the money is going will help.
Calculate Your Income
This should include any income that comes into the household like wages, support payments, self-employed income or any benefits. Don’t forget to include things like a rental income, child support and work bonuses. Once you’ve established your household income, you can determine what you may need for an emergency and identify savings goals.
Debt Should Be A Priority
Perhaps the most financially irresponsible things you can make for your family is saving for additional assets when you are already in debt. With mortgages, credit cards, student loans, etc. you need to be at the top of your game.
If your income is the main income in the household, it’s important for you to discuss how dangerous debt can be and why it should be a priority before things like family vacations.
Determining Needs Vs. Wants
Spending money is something you can’t get away from in honest life. Basic resources cost money, so they need to come first when you are talking about needs and wants. Shelter, food, water, clothing, and transport are some of the things you should have at the top of your needs.
Then if your budget allows for it, you can allocate money towards wants like holidays, a new piece of furniture, or house modifications, etc.
Keep Track Of Expenses And Aditional Income
The majority of family members will have their own bank accounts, not including the joint account for the parents of the family. Keeping tabs of all the family spending is probably impossible unless it is openly displayed and recorded at the table. Bank statements and receipts are the easiest way to do this, however, with older children you might want to give them a little more responsibility to start understanding their own finances.
These five tips should help you to set a realistic and workable first family budget. Are there any other tips you think should be included? Please share them below.