How to Budget For a Family
How to Budget For a Family
For those budgeting just for themselves, the process is fairly simple. They know for the most part what their income is what their expenses are. But budgeting for a family can be a lot more complicated.
The majority of families have numerous sources of income. And when there are many expenses by different individuals, this makes things much more baffling. This is one of the major reasons that families do not have a proper budget. But having a budget and sticking to it can significantly improve a family's monetary outlook.
Making a family budget may be complicated, but it can be completed. Here is how.
1. Take record of all earnings. If a certain supply of income changes from month to month, use the lowest quantity or an average.
2. Keep track of all everyday expenditures for a month. Store all of your family receipts, and ask every member to turn their receipts in each day of the month.
3. Combine your monthly expenses. Make sure to count all bills, debt expenses, groceries, and daily expenses such as lunch and travel costs.
4. Assemble the family and talk about ways you can reduce the overall budget. Getting participation from other family members will assist you in determining which expenses are needed and which ones can be reduced or terminated. Maybe you or your spouse could start bringing lunch to work instead of dinning out, or maybe the children can end their activity in an extracurricular event.
5. In addition to individual expenses, discuss how you can reduce the electric usage, grocery bill and other common family costs. Mull over such things as carpooling or taking the bus to work if the costs is less, buying generic grocery products and adjusting the thermostat down during the winter and up during the summer.
6. Approximate how much your family can save on expenses, and cut the unnecessary items from the budget. Then recalculate the budget to see where you stand.
7. If your family budget has a surplus, allocate some of the surplus to savings. If your budget is in the red, rework the budget by make additional reductions until you have more income than expenses.
A reason that family budgets sometimes are not followed is because they are not realistic. It's ideal to cut down on monthly expenses, but at times we overestimate and go too far. For example, eliminating entertainment from the budget entirely could look good on paper, but when it comes to not spending on entertainment it is hard because we all need to relax at times.
Instead of cutting things like entertainment out of the budget completely, consider finding ways to reduce the expenditure. Revisiting the entertainment example, maybe you've enjoy going to dinner and a movie as a family a couple of times a month. But getting take out and renting a movie from the local store would be cheaper, and you can spend quality time together just the same.
Individual expenses can also be difficult. These kinds of expenses can be solved by allocating a particular amount for each family member to spend per week. If one member spends the entire amount allocated before the week is done, reevaluate the expenses and adjust if there is an issue.
Developing a family budget can keep spending controlled, leaving more funds to reduce debts and save for long term goals. But in order for a budget to succeed, close monitoring of the budget is required. Your efforts can be rewarded, with less financial stress and more money in the long run when your debt is eliminated.