How to Create a Family Budget – And stick to it!
Pay off debt – Save money - Avoid Future Debt.
By Renauld Smith
Industry Veteran & Executive Director of IAPDA
From the beginning just starting out to raising children and retirement, we’ll show you how to make your family a financial success.
Money management for a family budget
Money management and budgeting are fundamentally the same whether you’re a family, a couple or a single individual. All household budgets focus on food, transportation and housing costs. The only difference is the number of people considered in the formula.
How to Make a Budget
The best way to start is to gather all your financial information regarding income and expenses and get it in front of you in an organized manner. This will help you get a clear picture of your finances so you’re able to see your family spending habits and where you may be able to save money.
To create a monthly budget worksheet, start by downloading our Family Planner Outline Family Budget Planner
Use your bank statements to determine the amount of money deposited on a monthly basis. This number is your ‘Total Net Monthly Income’. Next, use the banking information along with your credit card statements to create a list of spending each month.
A three-month average snapshot of your spending for each category should be your target spending amount. Seasonally fluctuating bills should be estimated using the most expensive month as your target (review the previous year to estimate fluctuating bills).
Follow this process for next two months to identify any variations in your spending patterns. Now you should be able to estimate your yearly budget including how much money you’ll be able to save.
Remember, it’s not the best practice to blindly save the money that has not been spent. Including the monthly savings line item, you’ll be able to set your savings goal and stick to it!
Family Money Management Tips
The cost of running a family household will vary as each family has their own set of circumstances. For example, some families may need babysitters on a regular basis while others may not. There are however staple expenses that just about every family endures – holiday spending, vacations and back-to-school shopping.
Holiday Spending / Back-to-School
Anticipating spending events will keep you on track allowing you to afford the new clothes for school and presents for the holidays without abandoning your budget and taking a financial hit.
First day of school is never a surprise so planning months in advance for back-to-school supplies, clothes and shoes will keep you on your budget.
Planning for the holiday season can be as simple as buying gifts throughout the year. Some that practice this approach will use discretionary funds (coffee, dining out) and spread the cost over 12 months.
Once your monthly household budget is in place this is a good time to begin vacation planning. Vacations should never be overlooked even for those that are faced with a good amount of debt. A vacation is important for everyone in the family.
Reducing Expenses
When debt is major portion of your budget it’s important to prioritize your accounts. Reducing debt from your budget will allow you to focus your savings on retirement and education.
Cutting back on expenses is the obvious way to accumulate more savings to pay down debt. It’s possible to cut back on necessary expenses to help accumulate savings. For example:
Food Costs
A low-cost budget for a family of four is $234 a week roughly $1,000 monthly. Being conscious of what you’re purchasing is a good start.
Buy in bulk, if possible, look for sales and buy one get one items. Dining out is the easiest way to drain your discretionary income. Eat at home!!! Bring your lunch to work!!
Stop buying coffee, make your own. This is a no brainer for reducing expenses.
Utilities
Negotiating your phone, Wi-Fi and cable bills can usually lower your bills with a few phone calls. Lower your electric bill by paying attention to power usage and adjusting daily habits such as the thermostat settings.
Don't wait! Get the professional help you deserve!
Finding the right option is the first step towards a solution. Let iapda.org connect you with a specialist for a free evaluation to review your specific financial situation.
