How To Make Budgeting Work For Your Family
When you're single, budgeting is an important, but relatively simple task. You know how much you make and where you want your money to go. Once you're working with a family, however, budgeting is not only essential but exponentially more difficult to do. There are multiple opinions about what is important. More variables are introduced. If you are looking for guidance on how to make budgeting work for your family, read on.
Whether you are a single parent or part of a team, it's important for the primary stakeholders to sit down and create some long-term goals. Yes, you want input from the rest of your family on some things, but the adults are the ones who should be mapping out the goals. Whether you're just starting out and need to put money aside for an emergency fund, you are looking at pool financing companies or you are planning for retirement, a budget can help you reach the finish line only when you have established where the finish line actually is. Certainly consider more than one important goal, but know that the more buckets you divide your money into, the longer it will take to reach each one.
Define Your Income and Expenses
Once you know what you are working toward it's time to figure out where you are starting from. Review your last two bank and credit card statements and start tracking every dime. Break up your spending into buckets to see how much you're spending each month on everything from clothing to utilities. If your utilities vary wildly according to the season, create an average of your past 12 months' usage, which should be on your statement or easily available on your online account.
One benefit of analyzing your spending is it forces your family to acknowledge how much money is going to non-necessities or simply being wasted. Look for subscriptions you no longer use. Evaluate your spending on fancy coffees and eating out. Most families are surprised by how much of their monthly income goes to discretionary expenses like these.
Make a Plan
Once you know where you've been, your family can decide where expenses can be cut and funds reallocated to your goals. If you've decided that too much money is spent eating out and you want to save money by eating at home, make sure that you add sufficient money to your grocery budget to meet those needs.
Beyond that, it's important to decide how you will make your budgeting goals a reality. Buying more groceries won't fix the problem of eating out if you don't make meal planning part of your goals. While that might feel outside the parameters of a budget, it's key to making the budget actually work.
Whether you're using budgeting software or just a spreadsheet, the only way to know if you're meeting your budget is to record your ongoing expenses. Depending on the ages in your household you may ask everyone to enter their own expenses or you may want to collect receipts once a week and enter everything yourself.
Think about some areas where you end up spending a lot of money unconsciously. One thing that comes to mind is streaming platforms. Most of us have access to several movie and music streaming platforms. This ends up costing us dearly. A simple way around would be to use some credible platforms and download all our entertainment needs. To know more in this regard, click here.
Check In Weekly
Everyone in the house should take part in a weekly check-in. After you've run the numbers, sit down with the family to discuss the previous week. Expect that your budget won't be perfect and your spending won't be perfect for the first few months. Use the weekly check-in to review what went right and wrong the previous week and make adjustments to the budget accordingly.
Discuss what every family member will do in the upcoming week to help make the budget work. That can include deciding who cooks each night and what your meals will be for the week. It could also mean explaining your plans for replacing your expensive coffee drink each morning.
Prioritize an Emergency Fund
While you may want that pool or a trip to Europe, the first thing any budget should prioritize is an emergency fund. Financial planners suggest having enough savings to cover three to six months of expenses. Once you know what your expenses are, start putting the money aside to meet that window. While it may seem counterintuitive, this should come before even paying down debt. That's because if for some reason you lost your income, your savings can keep you from going even further into debt.
Even if you potentially keep your job but have an emergency that requires time off, FMLA means your job is held for you, but you can run out of leave before it expires. If you do lose your job, those savings can turn a panic situation into an opportunity to find the perfect new job.
With these five tips, your family will be ready for tomorrow, next year and 20 years down the road. If you're still unsure of how to meet your goals consider working with a financial planner who can help guide your budget and show you how to grow the money you are saving.