Do you need a family budget that works for you this year? I can see you squirming. You’re not the only one. For singles, creating a budget is relatively easy. They tend to have a good handle on how much money they have coming in, and when tracking expenses, they only have their own to think about. Of course singles can overspend, too, but it’s at least a bit simpler to see where the income and outgo are.

But creating a family budget is a whole new ball game.

Get your finances under control by creating a family budget - together!

Most families have multiple sources of income, so it’s not as simple as glancing at the paycheque. And when there are multiple spenders, that makes things much more confusing. This is one of the main reasons that families lack a formal budget. But having a budget and sticking to it can greatly improve a family’s financial outlook.

Making a family budget may be tricky, but it can be done. Here’s how.

Take inventory of all income

You might have some income that fluctuates, and that’s completely normal. There are two typical ways to handle that, and both work well, depending on your situation. Either take an average of the last three to six months OR use the lowest of the past six months. What you want is a good idea of what you can reasonably expect, not the highest amount you get.

Keep track of all expenses

Do this for a month or so. Keep all of your receipts, and ask all family members to turn theirs in to you each day. You will probably have to remind them – often – about how important it is. When you get them, make a note on each so that you can remember who turned in which receipt.

Add up your monthly expenses

Be sure to include bills, debt payments, groceries, and everyday expenses such as lunch money and transportation costs. While it’s not totally necessary, you might also want to take note of who is doing the spending. Asking Mom to cut back on her lunches out might not be the most effective way to cut costs if Dad’s the one who “just grabs a quick bite” every day. And no one is going to take Mom’s cost-cutting tips seriously if she stops at Starbucks before dropping off and picking up the children.

Talk about it

Get the family together and discuss ways you can trim the budget. It’s vital that you get their input, because one person really can’t create and implement a family budget. Besides, getting input from other family members will help you determine which expenses are necessary and which ones could be cut down or eliminated. Maybe you or your spouse could start taking lunch to work instead of eating out, or maybe the children can drop an extracurricular activity.

In addition to individual expenses, discuss how you can cut down on the electric bill, groceries and other necessary family expenses. Consider such things as carpooling or taking public transportation, buying more generic foods and adjusting the thermostat.

Estimate how much you can save on regular expenses, and cut the completely unnecessary items out of the budget. Then do the numbers again and see where you stand.

If you end up with a surplus, allocate a portion of it to savings. If you’re in the red, go back and rework the budget until you have more income than expenses.

Being Realistic

One reason that your family budget is likely to fail is because it’s just not realistic.

It’s great to cut down on expenses, but sometimes we tend to go too far. When you’re sitting and working things out on paper, it’s one thing to say that you don’t need an entertainment budget and the heat will be set at 55F all winter. In reality, you do … and it won’t.

Instead of cutting such things out of the budget completely, consider finding ways to lower the cost. Going back to the entertainment example, maybe you’ve been going to dinner and a movie as a family twice a month. But eating in and renting a new release would be much cheaper, and you would still get to spend quality time together.

Individual expenses can also be tricky. This can be resolved by budgeting a certain amount for each family member to spend each week. If someone spends his entire amount before the week is up, reevaluate his expenses and adjust only if really necessary.

Creating a family budget can help keep spending under control, leaving more money to pay down debts and save for future goals. But in order to succeed, close monitoring is essential, as is a commitment from the entire family. Your efforts will be rewarded, however, with less financial stress and more money in the long run.

Just Plain Living