Creating a family budget is not exactly the easiest thing to do and at the same time, it’s not rocket science. With the right family budget, you will be amazed at how much cost you will have to save yourself and your family and the extra money could be channeled to paying off debt, giving your home a new look, or going on a family trip/vacation.
But to save money, you must have a plan; when we say “plan,” we mean a realistic plan. And this brings us to the millionbuck question, how do you create and maintain a family budget?
How do you create and maintain a family budget?
There are many families out there that are neck-deep in debts and not in a better place financially. Not to trade blames, most times people get themselves into whatever financial mess they find themselves and it’s often due to one reason failure to plan. As the famous saying goes, the failure to plan is planning to fail. Sometimes, people plan to fail without knowing it because you could think that you have a plan when will have is a long list of unrealizable goals a plan that won’t hold water or take off.
If you are struggling to keep your create a family budget or get a hold of your family finance, you are not alone on that ship. There are thousands of families that are in the business of winging their way through life and spending without a plan. Interestingly, a 2019 report from the Certified Financial Planner Board of Standard showed that at least 60% of people don’t track their spending and 2 out of 5 have never had a budget.
The survey involved 300 adults who are between the ages of 35 and 65 and had invested at least one hundred thousand dollars in assets in the previous year, 2018. It may interest you to know that 43% of those who claim to have a budget used tracking tools rather than planning what their money will be spent on in advance. But then, there is more to maintaining a family budget than recording receipts and keeping tans of your spending habits.
How to creating a family budget
Creating a family budget involves following certain steps that are crucial to not only creating a family budget but also maintaining one. Here are the steps you should follow to create your family budget.
- Bring your partner onboard your plans
- Create your goals: mind you, they must be S.M.A.R.T goals.
- Keep tabs on your income and expenses
- Do an appraisal of your current financial situation
- Slash costs
- Cultivate a savings habit
- Service your debt
- Lower your taxes to the nearest minimum
- Go through your family budget regularly to ensure you are on course.
These are all self-explanatory steps you can follow to get started with creating your family budget. But that is not all. There is more to it than meet the eyes and we will take walk you through our stepbystep guide on how to create a family budget that will meet the demands of your family and help you run a happy and financially independent and stable home.
Easy steps for creating a family budget
Step 1: Choose your budgeting tool
Speaking of budgeting tools, you have two options to choose from you can either go with paper or electronic. Yes, starting a family budget can be a Herculean task to undertake especially if you don’t know jack about budgeting. But it’s nothing to lose sleep over. You can start with the basics and employ budgeting tools such as a family budget estimator and a family budget planner to keep track of your family finances.
Mind you, you don’t have to spend a fortune to get a family budget planner or estimator. A basic budget spreadsheet can also get the job done. The pen and paper approach is just as effective as its electric budgeting tool counterparts. The only difference is that the latter offers more flexibility and can independently check and detect errors or figures that don’t add up. Not to mention that the electronic option also makes things your task much easier to handle.
If you like putting pen to paper, your accounting ledger doesn’t have to be complex or complicated. The essential element is to highlight your debits and credits and you are done just like you have it in your bank statement. Remember, “debits” refer to every dollar spent while “credits” refer to every dollar earned.
However, instead of sticking to the tedious process of manually writing your transactions, there are several tools you can use to save time and minimize errors. Some of these tools are budget trackers and intuitive software that can keep track of fixed or recurring expenses. Some of these tools can also highlight discretionary spending, make suggestions of where your money should go based on a scale of preference while showing you the effect of your financial decisions on your bottom line.
Step 2: Bring your bank statement to the table
Remember, the essence of creating a family budget is to track all your expenses and find a way to strike balance between debts and credits without putting your family through hardship. As such all your earnings statements ranging from credit card statements, student loan interest, statements from the source of income, and receipts must be brought to the table.
Doing this will give you a clear picture of what your family finances look like and give you pointers on how to slash costs and maintain a profitable cash flow.
If you’re able to check these boxes, every other step will fall in place effortlessly. It becomes much easier to identify fixed and variable expenses, set up your ledger and family budget tools, control discretionary spending, and get you out of debt if you are in any.
Having a realistic family budget is essential to building a strong financial foundation for your family. It helps you to judiciously manage your income, control your spending, save more, clear your debt and stay out of debt while also making funds available for investments and living your best life.