How to Build a Family Budget

A lot of us already know how important it is to track your finances and keep close tabs on how you spend your money. When you don’t, it can be easier to slip into debt, overspend, and not save your money.

But what do you do when you have to worry about more than just supporting yourself? If you’ve got kids, a spouse, or anyone else that depends on you, you’re going to need to work their needs into your plan.

So, how do you do this? It starts by building a family budget. Maybe you’ve already been keeping track of your spending and feel like there’s not much more you can be doing, but the truth is, budgeting for a family involves more than just tracking your expenses.

We’re going to go over what’s involved with creating and maintaining a family budget and walk you through some of the most important steps to get you started.

1. Keep the Lines of Communication Open

Whether you’re supporting your household with a partner, a family member, or anyone else, the first thing you need to do is to make sure you are all on the same page. Before you get into any of the specifics about what’s going to make up the ideal family budget for you, the main decision-makers of the household need to have an honest talk about everyone’s financial goals.

One thing to squash right off the bat is any guilt that’s being thrown from any side about another’s goals or spending habits. Different people are going to have slightly different personal priorities, and those differences need to be respected. One person might want to save as much of their money as they can, and someone else might want to treat themselves from time to time. The key is to be understanding and compromise, as long as no one is falling into bad financial habits.

2. Set Concrete Goals

If you want to give your family budget a chance to accomplish what it’s meant to, you’re going to need to set goals and make sure your personal priorities work alongside your family’s.

Once you’ve sat down and set the goals you want to work towards, you can start to work out whether these goals are realistic and how you’re going to reach them. If they are, you can start to make the decisions that will shape your family budget.

3. Start Tracking Your Expenses and Income

Before you start deciding where your money should be going, you’ll need to get a better sense of where your finances stand. Start by going over your bank statements and review all of your expenses over the last two months. This can give you some useful insights into where your money is going and whether some of it could be put to better use. Finding some of your financial blind spots can help you work towards building better spending habits.

Assess Your Financial Standing

As you go through the process of tracking your expenses, start to separate them into different categories. These could be things like housing costs, food, entertainment, and debt. Try not worry too much about getting overly detailed in your breakdown. At this point, all you’re looking for is broad categories to get your family budget started.

Once you’ve separated your expenses into different categories and know how much money is going into each of them, separate them again into fixed and variable expenses. Your fixed expenses are going to any sort of bill that stays the same every month. These things are usually a bit easier to work into your budget because they don’t change. Variable expenses can be a bit trickier to account for because they can change from month to month or even week to week.

4. Look to Cut Spending

If you’re finding that money is tight, you’re having trouble paying your bills, your debt payments are getting a little too high, or you want to start saving more money, it’s probably a good idea to start looking for ways to cut back on your spending.

For example, maybe you normally order dinner several nights a week when you’re too busy to cook. This can be a big drain on your budget. So, making a point to go to the grocery store, planning out your meals, looking for sales, and buying things in bulk can all be great ways to cut back on your food budget and save some money.

You could also consider doing things like:

• Cutting back on subscription services
• Taking public transportation instead of driving
• Buying used clothing and furniture, rather than new
• Renegotiating your phone and internet plans or switching to a less expensive plan

5. Contribute Towards Your Savings

Saving isn’t for the future. You’ve got to start today, even if small. When it comes to savings, building your emergency fund is a great place to start. This money is meant to be there to help you handle emergency expenses that come out of nowhere.

Next, putting money into your retirement fund is another good use of any leftover cash you might have. This may also help you reduce your overall tax bill, which is key to managing a budget.

Review Your Family Budget Regularly

Putting together a budget for your entire household can sound like a scary task, but if you want to work towards a healthy financial future, it’s an important step to take.

And remember, it’s great to put together a family budget, but the work doesn’t stop there. Circumstances change, and these changes are going to affect how you manage your money. Make sure you review your budget on a regular basis, check in with it when you’re making a big purchase or financial decision, and use it as a roadmap to help you live within your means.

Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see CreditFresh’s Terms of Use.