When creating a family budget, it’s really does help to involve the entire family. This not only creates a sense of joint ownership but teaches financial literacy. How to create a family budget, or any budget, is not something that is taught in schools. More’s the pity.
Creating a budget for your family is an important step in making sure that everyone understands what they need to.
Regular money discussions with kids can help them be more aware of the reality behind the money that you and they spend. That your money is not a bottomless pit.
Something that us parents are always complaining about!
The first step in creating a family budget is to set some ground rules.
- What are your financial priorities?
- Do you want to pay off debt, or save for retirement?
- Perhaps you need to find an emergency fund, or start saving for the kids’ college education.
Once you’ve figured out what’s most important, it’s time to figure out how much money you have coming in. It may be more than you think!
How to create a family budget: start Now
These questions will get you started with a basic budget for your family. Adding in fancy tools and apps can come later, after you’ve identified the problem areas and started working on fixing them.
These are the questions you can start with to create your family budget. They are only the beginning, but as long as you’ve answered these first, it will be easier to bring in more fancy tools and apps later as you may choose.
Alternatively you might do what I’ve done and stick with a spreadsheet. Do what works for you.
A family budget is a living document, so it’s important that everyone in the family understands what they’re working toward and how their contributions will help.
It can also be helpful for kids to have access to finances as well. They may not understand all of it right away or know how the money will be spent, but that doesn’t mean they can’t help with a family budget.
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Questions and Tips on How to Create a Family Budget
1. What do you have coming in?
Creating a family budget is an important first step in making sure your money stays as organized and healthy as you do.
To get started, figure out how much income you have coming in each month and where it’s coming from. Figuring out your income sources and writing down how much you have coming in is an important first step.
Looking at the numbers on paper or using a spreadsheet will make it easier for you to come up with a monthly plan that takes into account the whole families’ needs, wants, hopes and dreams.
If you are paid biweekly then check out my post on how to budget your biweekly paycheck.
2. What do you have going out?
What are you spending your money on?
Start by printing off bank statements from the last six months and then organize them into categories.
I find it helpful to use different colored pens or highlighters so that it becomes more clear where every dollar is going. Some of these expenses may be necessary while others might not need a second look after all!
Take out unnecessary items first before slowly cutting down on what you spend unnecessarily, like Starbucks coffee, but want to continue. You don’t need to cut everything out completely.
Related posts: How To Stop Spending Money: 12 Tips You Need
3. What are your goals?
When creating a family budget, it’s helpful to know what you want out of life and how much money is needed for those things.
It can be hard enough figuring out how to afford the necessities let alone trying to save more than that! What do you need or hope for in terms of your financial future? What are your financial goals?
Think about the things you want to accomplish, like getting getting out of debt or paying off college tuition before it’s too late, and brainstorm ways that you can achieve them economically.
Try writing down a plan with short-term steps (a year) as well as long ones (five years).
- When do you hope to retire?
- What will be necessary in order make this happen?
- How much will you need to save each month?
Being on the same page as each other
In order to enjoy a happy and successful relationship, it’s really important both partners are on the same page, for both finances and other areas of your lives together.
Because studies have shown that financial issues are one of leading causes of divorce.
Being able to compromise and having open and honest conversations about money can help your relationship thrive, no matter what curve balls life throws at you.
Discussing finances with your partner isn’t always an easy task. You’re tired, the kids demand your attention, it’s difficult to start the conversation.
But when you’re on the same page, it really does become a lot easier to make financial decisions together and have more household peace!
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4. Where are the leaks?
Once you’ve written out all of your household income and expenses, it’s time to conduct a full audit. Remember those bank statements? Time to go over them with a fine-toothed comb.
Are they necessary for your life now or do they enhance your lives in some way? Can you afford these things on top of everything else that needs funding at this moment in time?
Look closely at categories like fast food, entertainment, travel. They can easily add to a big chunk of your budget and are the ideal place to find spare money if you need to. Don’t forget about recurring subscriptions either!
5. How can you fix the leaks?
You’ve probably noticed a leak or two in your family budget. If you don’t fix the leaks, it’ll be back to square one before long – and then where will that leave everyone?
Fortunately for all of us who struggle with this problem from time-to-time, there’s an easy way out!
All you have to do is make use of highlighters (I use green for necessary and pink for unnecessary expenses) so you can quickly see which expenses are necessary and which aren’t.
By highlighting unnecessary items as well as necessary items like bills, your focus becomes simplified. Just grab those pens/highlights and go through each section until everything looks green instead of pink!
Even if you think your leak is just a little drip, then it’s time to take action. Why waste (any) money?
The first step to fixing the issue of leaks should be following through with some relatively easy steps such as cancelling cable or switching to just one streaming service like Hulu or Netflix.
If you find that you’re eating out frequently, turn it into a challenge to eat at home for the next 30 days straight. You’ll be surprised how easy this is after just two weeks of saying “no” to unhealthy fast food.
When you know you can go back to eating out after 30 days, you’ll be surprised that the urge to do so has gone.
In fact, I bet you end up feeling better inside and out. You’ll have cooked and eaten healthier food choices and your portions will have been a more reasonable size.
6. How can you make more money?
Making more money has never been easier thanks to the Internet. 50 years ago, making more money meant you had to spend time and energy on things like delivering papers or mowing yards.
Now you can create passive streams of income where a single thing is created once that sells over again. If you’re not tech savvy, there are other options like waiting tables, a coffee barista or UberEats.
Sure they might sound easy (maybe, maybe not!), but if that’s not your thing – don’t worry.
There are many other options including blogging and vlogging about the gigging experience to provide another income stream. People LOVE following blogs and watching videos so why not teach others how to do what you do best: hustle?!
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7. How can you plan for the future?
Being able to retire comfortably means planning for the future as a couple and as a family. Looking at your 20 year plan, how much money do you need? How will you get there?
The answer can be found by asking yourself: Do I want my kids to feel like they have enough when it comes time for them leave home or go off on their own?
The earlier we start teaching our children about saving, the easier this habit becomes. Teach kids from an early age about saving up their allowance each week when they get chores or don’t have one.
Teach them to save half of whatever they earn while still giving themselves some spending cash every month. Setting these habits before children grow older is key if you want them to continue into adulthood with this habit set deep within themselves.
I can’t think of anything better than teaching your kids about financial responsibility. They’ll be much more prepared for life in the real world and you won’t have to worry as much when they’re out on their own.
I know it’s tough, but if we teach our children how important saving is early on then hopefully that habit will stick with them throughout their lives.
If they’ve already been saving half of what they make since before adulthood, chances are once all those bills start coming through every month this sound money management system will just become a natural part of who they are!
start your family budget
In the end, it’s always about your family when it comes to deciding how to create your family budget.
Whether you’re a newlywed or an empty nester, I hope these tips and questions can help you create some financial stability for yourself and those that matter most to you.
If this sounds too daunting, there are plenty of apps out there to help with budgeting. You never know what could happen in life so why not plan ahead? We want our families to be financially secure no matter what happens!
For more help in getting your finances in tip top order please read these posts:
7 Golden Money Rules To Embrace in Life
Personal Finance For Women: 9 Habits for Future Wealth
How to Stop Living Paycheck to Paycheck: 7 Proven Tips
Start taking back control of your money by grabbing your copy of the Money Saving Starter Guide today.
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Last Updated on 3rd April 2023 by Emma