Family Budget

Developing a Family Budget

• Specifically tailor your budget to your family’s needs, priorities and values. Do not get caught up in keeping up with the Jones’. Your neighbors’ budget should not factor into how you develop your family budget.
• Don’t lie to yourself. You should be realistic when writing down what you spend money on each month (e.g., taxes, car insurance, holiday purchases, clothing, cups of coffee, cigarettes, etc.).
• Let your family budget determine your discretionary income (money left over after the basic living expenses) before you decide to take on more debt.
• Your debt should not be more than 15 percent of your take-home pay each month.
• Saving five percent or more of your take-home pay is a necessary part of any budget. An emergency can happen without warning. Your car may break down, your spouse may need to be hospitalized and may be unable to work, you may need to travel to visit a sick or dying relative, etc. If you maintain a savings while living on a budget, you will be able to pay your normal living expenses while still dealing with an unexpected emergency.
• Involve all family members when setting goals and when deciding the amount of income to set aside for each goal.
• Keep your records simple and organized. Invest in a file cabinet or folders labeled for housing, transportation, taxes and health care expenses. You can then view your expenses quickly and efficiently. This may also help you see where you may be able to cut back on certain expenses. For instance, you may be able to save money on insurance by getting multiple policies with one insurance company.
• Don't panic if your expenses are more than your income. It may be necessary to revise your budget by reducing spending. Also, consider if you can earn extra income. Can the kids get a part-time job on the weekends? Can your youngsters mow a neighbor's yard or walk a friend’s dog to help pay for their personal expenses? Perhaps you can work an extra hour each day. The overtime pay could contribute a great deal to your income.
• If your expenses are less than your income, have fun allocating funds for those future goals, such as the purchase of a home, a car or a much-needed vacation.
• Nonprofit counselling services such as the Consumer Credit Counseling Service provide free budget guidance to help you calculate and, most importantly, stick with your family budget.

Family Budget Constraints

Living within budget constraints is not easy. It often requires sacrifices on the part of everyone involved, but the long-term results are worth it. The best way to ease the tension of a tight budget is to build in a rewards system. For example, at predetermined increments, as the savings account balance goes up, treat the family to dinner out, something new for the home that everyone will enjoy, or provide older children with cash bonuses. These small, goal-driven rewards will act as the short-term reinforcements necessary to keep the family working toward the same long-term goals.

And remember, you are the only one who can maintain your family budget. Buying without careful thought and planning can and will destroy your spending and savings plan.

Books on Budgeting

• Family Financial Workbook by Larry Burkett
• The Budget Kit: The Common Cents Money Management Workbook by Judy Lawrence

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