Quick and Easy Steps for Setting up your Family Budget
Budgeting isn’t a financial process specifically reserved for individuals with limited incomes, or couples saving towards a big cash expense. No matter what stage you’re at in your life, a budget can make things a lot easier, helping you to see where you should be spending your money, and where you can save to achieve your long-term goals.
When you start your own family, a budget is essential to getting the most out of every penny that you earn. After all, looking after kids and helping them to find their way in life can be an expensive process. To help you get started, we’ve put together some crucial steps for setting up your family budget.
1. Introduce your Kids to Budgeting
Setting up a budget is one thing, making sure you can stick to it is something else entirely. If you want to reach your financial targets as a family, then you need to make sure that everyone is on the same page. Provided that your children are old enough to understand money, invite them into your budgeting conversations, and show them how you’re using a combination of savings and borrowing money to make significant purchases.
If your children are too young to understand things like loans and interest rates, do everything you can to show them that you have to work towards making purchases. Keep them in the room when you’re counting out your bills for each month so that they can see the work that goes into making ends meet.
2. Pick Financial Goals as a Family
Goals are another important thing that you’ll need to think about when you’re setting up your family budget. Managing a successful budget as a family means working together to keep costs low. It’s harder to do that if your children or your partner doesn’t agree with the goal you’re working towards. Instead of just telling your children that you need to spend less on entertainment and takeaways, help them to understand the reasons for your frugality by letting them have a say in your financial goals.
For instance, ask your child if they’d rather have extra candy right now, or a family holiday next year. If they can see your reason for saving, they’re much more likely to get involved.
3. Come Up with New Ideas Together
Once you have your financial goals in mind and everyone has their sights set on the same target, make sure that every member of your family feels comfortable suggesting new ways to save money. Once a month, ask your loved ones to join you for a meeting where everyone can suggest at least one method of cutting costs. The suggestions could be something simple, like changing to a supermarket-own brand of food or more challenging, like cutting down on fizzy drinks.
Allowing everyone to get involved and make suggestions is a great way to encourage more creativity when it comes to cutting costs. What’s more, you’ll be able to benefit from ideas that you might not have come up with on your own.
4. Make it Easy to Track Success
Just because it’s easy for you to stay motivated with your budget, doesn’t mean that everyone in your family will feel the same way. Some people have a harder time sticking to a budget than others. Children in particular can struggle with budgeting, because it requires a lot of delayed gratification and patience. With that in mind, make it easier for everyone in your group to see the progress you’re making.
Consider using a budget thermometer on your fridge where you can fill in your progress towards your goal as you go – this is a great way to visually demonstrate your success over time. You can also have mini celebrations with your family when you achieve certain milestones.
5. Plan for Emergencies
Finally, remember that the last thing you need is for all your budgeting efforts to go out of the window when something unexpected happens. Make sure you can maintain your budgeting momentum by planning for issues and emergencies in advance. Putting some extra cash away so that you have a safety net to turn to when your car breaks down or your washing machine stops running is a great way to keep everyone mot6ivated.
Your emergency cash fund will ensure that you don’t have to dip into your savings and start from scratch when something goes wrong with your budget.