How to Create a Family Friendly Budget
Many people would rather do anything else than sit down and create a family budget. The thought of budgeting itself sounds restrictive. It takes self-discipline to create and maintain a budget, and doing it with a family can be challenging when everyone has a different goal. No wonder family budgeting can be a daunting task. As scary as the task may seem, it is important to know where your money is being spent. With some simple planning and coordination, you can create a plan that will impact your family's financial future.
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Things You'll Need
- Pay statements (2 to 3 months)
- Bank statements
- Credit card statements
- Monthly bills
- Calculator
Instructions
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1
Calculate monthly income. What is your available income after taxes, Social Security and Medicare? If you have income that is inconsistent, calculate your income from the past couple of months and average the amount on the low end. This will ensure you will have the money needed for your essential expenses.
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Write out financial goals. Are you trying to pay off debt? Are you saving for a future vacation? Private companies budget to meet organizational goals. You can use this concept as well in your budgeting. Keep your goals in mind as you are creating the budget so you can have positive reinforcement.
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3
List all your monthly expenses. If you don't know the amount, look at your old bank statements. If you pay your bills with a credit card, look at your credit card statements. Some expenses that fluctuate based upon usage, like your gas heating bill, can be calculated on a monthly average by calling the company and requesting the amount.
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4
Prioritize your expenses in categories such as essential and discretionary expenses. Essential expenses are those used to operate your house and feed your family (mortgage, food, transportation and utilities). Discretionary items are those you and your family may want but do not need to live, such as entertainment, children's activities and dining out. Talk to your spouse and children to get their input. Remember that you and your spouse are the final decision makers on the budget. Debt (i.e., credit cards, personal loans, car loans, etc.) may be considered discretionary expenses. These items should be paid. However, you may be able to negotiate lower payments or financial deferment.
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5
Deduct your essential expenses from your total income. The leftover amount is what can be allocated to discretionary expenses. This may also include the budget item for your family's goals. If you do not have enough income for all the discretionary items, you must cut the discretionary items or find ways to lower the cost of those items.
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6
Review totals at the end of the month. Just like a business reviews its budget regularly, you must review yours, too. Perhaps your original budget did not include realistic amounts for income or expenses. Monitoring the total at the end of the month allows you to make adjustments for the next month.
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