If you’ve been living without a budget for a while, you might be experiencing dread when it comes to looking at finances, especially if you need to plan for your family. You should already know that you need a budget regardless, but it’s a bit different when kids are thrown into the mix.
Making a family budget doesn’t have to be painful, and it could even be fun once you get the hang of it. Budgeting is not about making your family’s lives harder. Rather, it’s about planning so that you have money for all the things you want to spend on. In this post, we’ll look at some different ways to budget, talk about how to set it up, and give you some good ideas on how to bring your family into the financial planning.
There are many ways to budget in 2017, and you can find one that suits your personality. Finding the best one for you means you’ll be more likely to stick to it. Here are some choices of family budgeting tools:
Software Budgeting. Software has been around for years and can be a very comprehensive way to budget. Two of the best budgeting softwares are You Need a Budget and MoneySpire. They contain perks such as bill pay and customer invoicing if you run a home-based business.
The only drawback to software budgeting is that it costs money, so you might want to choose another method if you have limited funds.
Excel. Do you love creating and analyzing through spreadsheets? Then, this is the tool for you. There are hundreds of ways to create a personalized Excel spreadsheet, but here’s a good one to begin with: Excel Family Budgeting Planner.
Mobile App. There are many budgeting apps to choose from, and they could be effective for you if you want an easy way to write down planned and occurring expenses wherever you are. It’s a great way to not only budget but to track what you spend. Some useful mobile apps include Mint, Mvelopes, and Wallaby.
Pen and Paper. Sometimes you just need a low-tech, simple way to plan your finances. Writing down expenses on a blank page or on a PDF like the Quick-Start Budget PDF, might be the easiest solution you find, especially if you’re starting out for the first time.
How to Set Up a Family Budget
Your budget should consist of three main components:
Goals. Looking at goals helps you determine what you’d like to do with money. It helps to look at these first, and then see how to achieve them after you calculate the rest of your budget. This way you can focus on what matters most before diving into the raw numbers.
Financial goals could be a family vacation or putting money away for a child’s education. It could be as short term as buying a new refrigerator in three months, or as long-term as planning for a retirement in 20 years. It’s whatever you want to do with your money and a roadmap to get there. You won’t have all the details figured out quite yet, but it’s a good start.
Income. This part is simple if you work a 9 to 5, but can be more complicated if you’re self-employed and don’t have a regular check. Either way, examine your bank statements to see what comes into the account each month, then write all income down on a notepad.
Expenses. For this section, write down all expenses you can think of. You’ll probably want to go through credit card and bank statements to make sure you haven’t missed anything.
After you write down expenses, go through your list and place a checkmark next to the items that are must-have. For most people, these items are housing, utilities, and transportation.
Food is a necessity too, but the dollar amount can change if you budget your meals well and don’t eat out. Be willing to shift your food dollar amount and eat inexpensively if your goals and financial planning call for it.
After you figure out the necessary expenses, focus on everything else. You know if you need to cut if your expenses are greater than your income.
Be sure to set aside some money for fun. It’s okay if it’s a frugal or practically free activity, but make a category for this, and call it “entertainment”.
Bringing in the Family
Now that you have the budget figured out, you can discuss what you want to do for fun as a family. Kids don’t need to know every number on your budget. They only need to know what will involve them, and for most families, it’s entertainment and vacations.
This is the best time to let everyone know how much money you’re setting aside for entertainment and to ask for suggestions. Involving kids in the fun part of budgeting helps to expose them early on to financial planning in an exciting way. Be honest, realistic, and creative as you consider things you’d like to experience as a family.
Setting up a family budget may be a hard at first, but it is rewarding because you get to decide what to do with your money. Involving the kids in the final plan is an excellent way to include them in the decision-making process and teach them about budgeting.
Now it’s your turn. How do you budget for your family, and what are some ways you involve your family members in the process?