Creating a Family Budget

*This post may contain affiliate links, which means that I may receive a commission if you make a purchase using these links.

           

When creating a family budget, every member of the family must be on-board. This means that everyone must be aware of your financial situation, future financial plans, and the strategies you are setting up in place in order to improve your financial situation.

If you don’t know where to start, here are a few tips that may help you come up with a realistic and achievable financial goals.

Identify where you are at – Financially

This means being transparent with how much you are earning as a family, list down all recurring expenses like rent or mortgage, insurances, school fees, food, car payments, and the likes.

This should help you get an overview of your income versus expenses.

Cutting down on expenditures.

Identify which of the following expenses can be cut down or eliminated. Example, if you are spending $250 on take outs or food delivery, find a way to bring this down. Maybe cook more at home, compare delivery charges and go for the most affordable ones, or maybe stock up on frozen pizzas at home if you identified that this is what you usually order,

Decide on a budgeting plan

There are many budgeting plan models available. One example is the 50-30-20 method. 50% of your income goes towards your family needs like food, car payments, gas, utilities, and the likes. 30% then goes towards wants. You do not have to necessarily eliminate dining at restaurants, take outs, and travels. You just need to stick within that certain budget. The remaining 20% goes towards savings, debt payments, or emergency funds.

It pays to have at least 6 months worth of savings allocated for emergencies but as a back-up plan, identify in advance a quick and secure access to loans so you know exactly who to turn to in an event of an emergency. An online loan delivered quickly can save you from stress should the need for additional money for emergency purposes.

Track your expenses

One of the best ways to stay within the budget is to track your expenses. This will help you avoid over spending and will also give you an idea where most of your money goes to. As long as you stick within the agreed budget, you should not have to worry about going into debt in order to make ends meet.

Prioritize communication

A change of lifestyle (or expenses) can be confusing to the kids especially the smaller ones. They might wonder why they used to get 4-5 gifts in the past Christmases and get just 1 now.

Carefully explain to them what the goal is in a manner that they can understand. Avoid pulling kids out from extra-curricular activities like soccer, ballet classes, or gymnastics without mentally and emotionally preparing them. These things can be expensive and may give you a huge break in your expenses. But it is very important to remember that communication is key. You must be able to fully explain the situation, what your plans are, and what you hope to achieve financially as a family.

Lastly, remember that you can change your budget later on. As you try it for the first few months, you will see what works and what doesn’t. This will allow you to make necessary changes in order to keep your finances at a healthy level..