Planning a family budget is vital to getting out of debt and staying out of debt. Do you have one? Here are tips for creating a family budget and sticking with it.
Get it on paper
The first step in creating any budget is to take an honest look at your financial responsibilities. This means tallying not only your monthly living expenses, but also your debt obligations. Here's a link to a great printable budget that you can use for this purpose:
As you fill in this form, use your minimum credit card payments for the credit card lines. This will give you an accurate look at your minimum monthly obligations.
Assess the Damage
Once you have filled out your budget form, total your monthly expenses and compare this figure to your monthly income. Do you have more expenses than income? Do you have more income than expenses? The answer to this question will dictate the next steps in your budgeting process.
Money to Spare
If you have money left over after meeting your basic obligations, it's time to tackle your debt load. Take a look at your overall debt and decide how much you can afford to pay off each month. Add this figure to your monthly budget.
No debt to unload? Then, set up a savings plan for your family and divert funds to this purpose.
More Month Than Money
If you find you aren't making enough money to meet your basic obligations, it's time to scale back. Continue to rework your numbers until your expenses fall below your income level. Then and only then do you have a workable family budget.
Bring the Family on Board
Perhaps the biggest challenge in creating a family budget is getting the family to stick with it. Start by sitting down with your family, the kids included, and explaining what you hope to accomplish with your new budget. Are you looking to reduce stress? Cut back on work hours? Pay off debt? Save for a special family vacation? Make your reasons for the new budget known, and then explain what has to change to meet that goal. Will it mean eating out less? Saying goodbye to cable? Scaling back on clothing purchases? Be honest about how this new budget will affect the family, and you'll be much more likely to receive your family's support.
If you feel uncomfortable discussing your finances with the kids, stick to the overall picture rather than the intimate details. For example, it's enough to say, "We've been spending too much on dinners out, and we really need to work on cutting back on this."
To keep your kids committed to your budget, encourage them to come up with ways to contribute. For example, if your new budget is designed to save enough money for a trip to Disney World, ask the kids to think of ways to speed up the saving process. Would they be willing to bring their lunches to school instead of buying them? Could they hold off on getting a new pair of shoes? Would they be willing to trade in your family night at the movies for an evening of board games at home?
After you've reached a consensus on what needs to be done, follow up each month with a family meeting to review the success and failures of your family budget.
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