Financial literacy is a passion of mine. I shared in a recent post why I prepare for rainy days while enjoying my sunny days and the security and happiness of my family is a large factor. Budgeting as a family isn’t always fun or easy to do, but it does help to get everyone on the same page and create an awareness of short and long-term goals for your family.
Keys to a Successful Family Budget
Creating a family budget is within everyone’s reach, but creating a successful one requires some particular methods. Here are some tips to help you create a successful family budget. April is Financial Literacy Month and a great time to get your family on board to create a family budget or start a savings challenge together.
Get Everyone on Board
The more inclusive your budget is, the more likely it is to work well for your family. Include every family member who is old enough to understand. A budget affects everyone, and it’s a good idea to listen to input from other members of the family.
Leave Room for Luxuries
Some budgets are so tight that it may seem there’s no room for any luxury. But if you get a bit creative about what constitutes a luxury, you will probably find you can in fact afford some kind of privilege or luxury. It could be something like buying your favorite brand name item at the store instead of settling for the store brand, or maybe buying fresh fish instead of frozen once a month. Maybe ordering a pizza or Chinese food is a luxury for your family that you can include in your budget.
If you are budgeting with more money, your luxury could be a family vacation or new piece of electronic equipment. The point is to include some kind of luxury in your budget. This helps keep family members motivated and makes the budget easier to deal with.
Get a Good Estimation
To do this, it’s a good idea to take your last three months’ worth of income and create an average. When in doubt, round down so that surprises will be more likely to be on the plus side. The same is true for expenses – include at least three months of expenses to get a true picture.
It takes a few months for a budget to sort itself out and become habit. There will be bugs that need to be worked out. Understanding this can help you stick with it as it needs tweaking and adjusting.
For some, using software to lay out the family budget can be very helpful. Software that is designed for the purpose may make creating the budget easier.
As you look at the things that cost you money, remember gas and miles on your car. Combining errands is something most people try to do; but there might be some other combinations that you hadn’t thought of. For example, visit out-of-town family members during your vacation.
Distinguish between Optional and Necessary Spending
This distinction is harder to make for some people than others, and it’s tougher in some family dynamics than others. What one person thinks of as a “necessity” might be looked at as a luxury by someone else. If you’re in doubt, check budget formats and accepted principles in this regard that come from a third party.
Pay off Debts
It’s unpleasant, but paying off debts needs to be high on the priority list for your family budget. The sooner they’re paid off, the sooner you’ll have more money left over!
Let’s Talk About It:
Does your family have a family budget?
Do you discuss finances as a family?
Do you have a shared savings goal?
Make Sure You Read These Related Articles: