Creating the Family Budget in Seven Simple Steps

BY MEGAN TAYLOR

One of the most useful things a person can have is a budget. This simple tool helps someone understand their expenses, save money, and divide their income(s) into different categories, such as entertainment, food, etc. Another good thing about a budget is that it isn’t just for individuals; budgets work for entire families. When it comes to creating a family budget, it is all-hands-on-deck. Every member can play a part in participating and cooperating when it comes to spending and saving money. Getting started with a budget can be confusing, but don’t worry, I’ve got seven steps to make the task easier.

1. Decide on the type of budget system your family will be using. It might be the traditional pen and paper or notebook, excel spreadsheet, software program, or a budgeting system, such as the envelope method. Think about what would work best for your family. Do you have young kids? Do you want something that is simple and easy to keep track of? Are you tech savvy? Consider these types of questions when choosing your system. My favorite is the excel spreadsheet. I can quickly access it on my computer, input my categories, and numbers. 2. Next, gure out the categories for your budget. These elements are based on your family’s habits and daily life. Of course, the categories that need to be included are: family expenses (groceries, clothing, children, and animal needs), medical expenses, household bills, car, debt, and savings. Then, you can customize it even further and create a section for entertainment, family vacation, and outings, date nights, holidays/ birthdays, etc.

3. Once you have your categories, set some family nancial goals, both short term, and long term. These should be created as a family with everyone’s input taken into account. For example, your goals could be to pay off the family debt in the next ve years, take a trip to Disney World in two years, or save a certain amount twice a year for your children’s college tuitions. By developing the nancial goals as a family and making it an important event, it allows all members to be accountable and in the know.

Be aware of talking about any hardships or troubles in front of your children. The family budget should be a learning experience, but shouldn’t make the kids worry about the future.

4. Add some fun to the learning experience by labeling empty jars with various nancial goals. Then, let everyone (kids and parents) drop their spare change into the various jars. Every so often, count the cash and write the total somewhere visible. Also, have the amount needed for the goal in an easy spot to retrieve, as well. Make it a game and have loved ones guess on which jar lls up rst.

These jars are great visual reminders of how hard work and commitment can accomplish goals.

5. Once you have your categories, calculate your income and expenses. With any type of budget, you rst need to know how much money is coming in. Always start with your income amount when setting up a budget. This way you can tell up front how much you have to spend. If you don’t have an exact amount, gather up your paystubs from the previous months, add them up, and there is your yearly income. Along with your income, think about what expenses are xed and variable. Fixed are payments that are the same amount each month, while variable expenses are payments that change from month to month, such as groceries and gasoline. After adding up your expenses and subtracting them from your income, the left-over amount can go towards your “want” expenses and savings.

6. Look at your xed and variable expenses to see where you might be able to reduce to put more money in your bank account. Also, look for opportunities to earn extra cash. Maybe do spring cleaning and sell unwanted items or pet sit for your friends and family.

7. After creating the budget, your family’s job is to maintain it. Meet at least once a month, usually at the end of each month, to analyze the budget and see where adjustments need to be made. Also, discuss your nancial goals and your progress. The more often you review your budget, the better off your family will be.

Creating a family budget can be tricky at rst. Take it one step at a time, don’t get discouraged if things don’t go as planned, and stay on track as best as possible. Soon, your family will accomplish their nancial goals and be stress-free, at least in regards to money.