How To Make A Family Budget
If you are single, creating your budget is easier. This is because you already have a pretty good idea how much money is coming in. Your area of financial struggle may be keeping track of how you are spending it.
What are you expenses? And what are all the extras you are buying without keeping track of how it is all adding up?
Mind you though, you, being a single, only have you and your spending to keep track of. So you can quickly figure out your financial picture faster.
Creating a family budget is a whole different kind of ball game.
Several Things To Consider
Most families have several sources of income. And being more than one person, there is typically more than one person spending the money too. This makes it a bit more challenging trying to keep track of where every nickel is being spent. But until you figure it out, it will be hard to see whether, as a family, the money is being used wisely in all areas.
So in order to work past the confusion, as a family, you need to sit down and figure out a budget.
Yes, involve the children in this too. This will help them for when they become adults and have to figure out their own budgets. In the meantime, they are part of the family, and need to see that money does not grow on trees.
When they understand more about bills and what must be paid first, they will understand more clearly about needs vs wants and the wall of financial decisions. Having a budget and sticking to it can really help a family’s entire financial situation.
Grab These Basic Tools First
Making a family budget doesn’t need to be complicated. Here’s what you need to get started.
You can download a FREE resource here, called the Basic Budgeting Beginners Worksheet. This fill in the blank resource will help you to figure out the most common items you need to be keeping track of.
Don’t forget to grab a calculator and a pen too.
Who Will Be The Family Bill Payer?
For the family, it must be determined who will be the bookkeeper. This is a decision that must be settled between the adults. Do not involve the children at this stage.
Typically this will be the man. After all, he is the one who makes sure the rent/mortgage is paid, hydro, heat, gas in the car, etc.
Yes, as a woman, I have had the role of bookkeeper in my past, however, the stress of that along with being a wife and mother is overwhelming. I am personally relieved that, with my current husband, I no longer have to shoulder that responsibility. Although I know how to do the bookkeeping, I no longer have the stress of it.
Even if your husband or significant other spends money foolishly, perhaps, putting them into the God given role of head of the household, will curb that behavior. It is amazing when the responsibility to pay bills becomes evident how mindsets and behavior changes.
So, first thing, pick who will keep track of the money and making sure bills are paid.
Track The Money Coming In
Start with tracking all of your sources of income.
If you are unsure exactly what all the sources of income you have, check out: Discover What Income You Truly Have.
If a source of your income changes from month to month, use the lowest amount that it typically is just to be safe. Or you can average it out.
To make sure that your budget, when completed, is as accurate as possible, use the lowest income amounts. This way you won’t have a false feeling of security of thinking you might have a higher income. When in reality, that might not really be there.
Track The Money Going Out
Keep track of all expenses for a month or so. This means that you need to keep all of your receipts.
Make sure all of your family members are getting receipts for everything they purchase too. That includes even grabbing a coffee at McDonald’s. All family members need to hand their receipts into the central bookkeeper.
You may need to get a special shoe box or large jar for everyone to place their receipts into every day.
Add up your monthly expenses. Be sure to include:
- bills—rent/mortgage and utilities,
- debt payments—car payments, credit cards, loans,
- and everyday expenses such as lunch money and transportation costs.
To help you figure out some of those expenses you might not be thinking of, remember to grab your FREE Basic Budgeting Beginners Worksheet.
The adults need to rough out the income and expenses lists before moving onto the next step. That way the adults won’t get into talking about any budgeting surprise expenses.
No arguing in front of the children. You don’t want their fear, you want their cooperation.
Family Conference Time
Get the family together and discuss ways you can trim the budget. Getting input from other family members will help you determine which expenses are necessary and which ones could be cut down or eliminated.
Maybe you or your spouse could start taking lunch to work instead of eating out, or maybe the kids can drop an extracurricular activity.
In addition to these individual expenses such as bag lunches or dance classes, discuss other expenses as well.
Reduce Hydro Usage
For instance, discuss how you and the entire family can cut down on the electric bill. Turn off the lights when not in the room. What about all of the electronic items eating “phantom” power? That kind of hydro usage really does add up.
Or perhaps your income level is low enough that you qualify for the Ontario Electricity Support Plan. Learn more about how that can save you $407 a year. Adjusting the thermostat is a simple thing you can do immediately to cut your hydro costs. Our winter heat is set at 67 degrees Fahrenheit. If cold, just grab a sweater.
Food Security Issues
Are there ways you can reduce the grocery costs? How about growing a small garden?
Get the children involved in fighting back against Food Security Issues. They can grow a tomato plant or bean plants. Even in an apartment, they can have some responsibility in providing a food source.
You can also buy more no name (generic) food items. No name products can be cheaper than top brand names. Also, make your own Frugal Friday Flyer and buy more with less money. Buy produce off of the reduced price section. There are several ways to reduce food costs. In fact, you may be able to start feeding your family more nutritious meals and save money.
And what about any other necessary family expenses?
Consider doing things such as carpooling or taking public transportation if available in your region.
Estimate how much you can save on your regular expenses of:
Then you and your family are in a better position to look and the other expenses. Now, as a family it can be discussed and determined which items are completely unnecessary. It they are unnecessary, they can be items to cut out of the budget.
Update The Details
Now, your family bookkeeper can re-figure all the numbers and see where you and your family stand on the complete budget picture.
If you end up with income left over, then you can put a portion of it to savings or an emergency fund.
However, if the bills are still more than the money coming in, you and the family need to go back and rework the budget. Keep shaving off the “wants” until you have more money left after paying the expenses.
One reason that family budgets often fail is because they’re just not realistic.
Yes, it’s great to cut down on expenses, but sometimes we tend to go too far.
For example, cutting all entertainment out of the budget might look good on paper, but it isn’t realistic. Every family needs fun times together. You and your family just need to rethink how to do that on a tight budget.
Consider finding ways to lower the cost. Going back to the entertainment example, maybe you’ve been going to dinner and a movie as a family twice a month. But eating in and renting a new release would be much cheaper, and you would still get to spend quality time together.
So, creating a family budget can help:
- keep spending under control,
- leaving more money to pay down debts
- and save for future goals.
But in order to succeed, keep a close eye on your efforts.
Sit down monthly and do an update on the success or failures of the month. What needs to be changed, or adjusted? If it was a successful month, acknowledge that too.
When you know how to create a family budget, your whole family is the winner. As everyone works together for the same common goal of improving the financial situation, your family’s efforts will be rewarded. There will be less financial stress and more money in the long run. Your family will be the winner.