Protect What Is Most Important with Family Budgeting

While budgeting should never be neglected, family budgeting takes on special importance. When there are more people, particularly loved ones to support, good budgeting habits become a critical skill to master and keep.

Those creating a family budget, just like every other budget, need to find a way to make income exceed expenses. While this is no secret, many people do not have the techniques to make it work. Fortunately, with a combination of organization, software, goals and the right attitude, family budgeting becomes a lot more effective and goals easier to attain.

Reasons for family budgeting

Creating and following a budget takes on more meaning than just making ends meet when in a family setting. Not only is it important to be able to afford those things children and other loved ones really need, but it is vital to keep in mind that children learn a lot, including their approach to money, from their parents and surroundings. Those who grow up in an atmosphere where debt is minimized, saving maximized and money spent in a responsible manner are much more likely to pick up the same habits later in life. On the other hand, those who experience the opposite environment are more prone to have financial problems.

In addition, nobody can be sure exactly when and where a problem might arise that requires a rainy-day fund. With the right budget, the chances of having that extra cash when needed will be much greater.

Start with the whole family

Being a family budget, the whole family needs to be involved. In this cooperative effort, everyone needs to understand the goals and contribute what they can. Meet as a family when setting goals and tracking progress. This can be a great learning experience and bring a family closer together.

Get organized and track

family budgeting

To really get a hold of a budget, it is first necessary to know how much money is coming in, where exactly it is going and the bottom line. This can be accomplished by:

  1.  Estimating total income: It is important to be conservative with this estimate and not take into account one-time payments
  2.  Track total spending: This needs to be divided between fixed expenses (being careful to include those expenses that do not come on a monthly basis) and discretionary spending. Since discretionary spending can be the most difficult to control and often eats a big hole in many budgets, it needs to be tracked very carefully, with all expenditures organized into specific categories.

Choose the right organizing method

Of course, it can be a bit tedious to track everything. For those willing to make a modest investment, software budgeting tools can eliminate a lot of the tedium of budgeting, particularly if they are web based (accessible anywhere) and allows financial data to be imported from bank accounts and other sources. In addition, there are various budgeting spreadsheets that can be had for free or at low cost which can do the job. However, for complete control, it is fine to use a regular Excel spreadsheet, and something can be said for increased attention to spending manually imputing financial data can offer.

Set goals

With human nature being what it is, the chances of completing any task successfully are greatly increased when clear goals are set first. Both short- and long-term goals are advisable. Set goals that are challenging yet attainable and track progress towards them. Make it fun for the whole family and have rewards for each goal attained.

Cut spending

To keep expenses under income, it is either necessary to cut spending or increase income. Since increasing income is not always an option and can just lead to higher expenditure anyway without controls on purchasing, finding ways to reduce spending is paramount.

Cutting discretionary spending is where most people start. Every option needs to be considered. Entertainment spending is a good place for savings with things like restaurant meals substituted for home cooking, trips to the theater replaced by DVDs and trips to the library in lieu of buying books.

There are far more ways to save money than will be covered here, and each person needs to look closely at their own budget and way of life to uncover the true savings that can be found. Many of the best savings are long-term and come with changes in lifestyle and mindset. For example, is it really necessary to have that flashy gas guzzler or that big house? Considering how many hours that one must work to pay for thus things after taxes and financing, could not more happiness have been found by spending more time with the family?

Find motivation

It takes motivation and self discipline to pass of the pleasures of today for a better future. Those in debt can think of the power that the debt has over their lives and imagine a future of having money work for them as savings instead of the other way around. The importance of saving money can never be overstated. Modern society makes it easy to want new things that usually only bring a short and marginal emotional boost. Instead, try to think of all the pleasures in life from having family and current possessions before getting more.

Never stop budgeting and saving

Pay off one debt at a time and devote all the funds from paying off one debt to the next. Once all debt is paid off, consider savings as a kind of expense that has to be paid. All the money that formally went into paying off debt can now go into saving and building a better future. Although family budgeting is different for everyone, this should always be one of its primary goals.

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