Updated On — 21st Jan, 2021
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.
Tips for Creating a Successful Family Budget
Having a family budget means, for some people, whipping out the calculator at every purchase, or viewing the budget on their mobile device in the grocery store.
For others, a family budget is just a formality and they never really glance at it.
Between these extremes are those who sort of use their family budget with moments of obsessive adherence, or those who try but give up altogether because they go crazy trying to keep track of all the details.
Where’s the balance? How can you maintain a healthy outlook without obsessing or ignoring your family budget?
Here are some tips on how you can cultivate a healthy outlook regarding your family budget.
For those who tend to err on the obsessive side, it is a good idea to remember to be flexible with your budget.
Of course, flexibility does not mean ignoring your parameters. But it does mean you can take a little from one area and cut back in another when necessary.
2 Get Your Family On Board
Nothing can make you frustrated with a budget like lack of family participation.
Family members might just rack up expenses without giving the budget a second thought, leaving you to tear your hair out trying to balance it and cover the expenses.
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.
3 You Don’t Have to Keep Track of Every Penny
Some people avoid a budget because they don’t want the stress of keeping track of every cent spent.
They’re right – that is stressful.
But it’s not the only way. Look into budgeting in a general way, or simply work out a list of expenses, income, and how much you have in the bank right now.
Don’t be afraid to get creative with your budget, and customize it for your family’s needs.
Your outlook is likely to be a lot healthier if your budget is suited for your income, expenses, and personality. Your family dynamic should be taken into consideration when you form your budget.
5 Forgive Yourself and Family Members
Everyone makes mistakes and breaks the budget now and then.
Beating yourself up over a budget mess-up is not conducive to a healthy outlook, and neither is nagging and punishing family members.
If it’s a chronic “mistake,” it may need to be addressed in a civil family meeting. But to keep a healthy outlook, let the minor offenses go.
6 Know When It’s a Real Emergency
What constitutes an “emergency” can differ between family members.
Dipping into the emergency fund for non-emergency expenses can deplete the money pretty fast. Make sure everyone knows what a real financial emergency looks like for your family.
7 Leave Room for Wants
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.
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.
8 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.
9 Be Patient
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.
12 Optional vs 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.
13 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!
Tips to Getting Everyone On Board
As I’ve mentioned above, getting everyone involved is important to the success of your family budget.
But you may be wondering if that’s really necessary, or how to even do it.
Here are some ideas and tips for getting everyone on board with creating a family budget.
Be Honest with your Kids
Sometimes parents try to hide their financial situation from their kids and/or each other.
While this may seem like “sparing” the ones you love, in actuality it can cause undue stress on the one family member who does know how bad things are, or how things work financially.
It’s true that you don’t want to overburden your kids with responsibilities that aren’t theirs, but including them in a frank discussion of your financial situation can go a long way toward easing your burden and garnering their willing participation.
Start Family Meetings
Call a family meeting to discuss finances.
If you’ve never done a family meeting before, this is a good place to start. It may not be everyone’s favorite topic, but it’s an important one.
Ultimately, your kids and spouse will be glad you included them in the discussion. Another tip on the meeting – try to call it at a time when it doesn’t cut into other plans.
This should help reduce frustration.
It Affects Everyone
Explain how your family finances affect everyone in the household.
Be clear and specific, citing fees, tuition, allowances, groceries, etc. and how they all cost money. There’s no need to beat everyone over the head with this information, so to speak; but it gets family members to think a bit about where the money comes from.
It’s easy to take things for granted.
Tackling Cutting Back
If the budget involves cutting back, it’s probably a good idea to cut back in areas that affect the whole family rather than just one member.
Otherwise, that one person may resent what seems to be preferential treatment of the others, and you’ve lost your whole-family approach to the budget.
Set Goals Together
As you work to formulate your budget, work on common goals.
What would your youngest child like to see as part of the budget? She might say toys. Your oldest child might point to electronic devices as something to include; your spouse may say a nice vacation.
Consider everyone’s wishes and come up with some realistic, common goals.
Not everything is doable, of course; but finding creative ways to get everyone’s needs met is what family life is all about.