Creating & Planning a Family Budget

Written by: Dorothy Bland • Edited by: Laurie Patsalides
Updated Sep 8, 2011 • Related Guides: Microsoft | Family Budget

The demands of running a household can be stressful, especially if you don't have a clear understanding of where your money goes. Making a family budget and learning how to better manage your money will help you make sure everyone feels represented.

Why Preparing a Family Budget is Essential

If you spend every month stressing over how to afford groceries or pay your major expenses it's time to create a family budget and take the pressure off your back. Contrary to what you might have heard, making a family budget is not just for those struggling to make ends meet and it does not have to be a painful experience. By planning a family budget and sticking to it, families can plan for large expenses, pay off debts and teach kids responsible money management.

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Examining Family Expenses

Every dollar a member of the family spends adds up. If you have no clue where your money goes, start tracking. Before you can create a useable budget you have to understand the total amount you have coming in. Any income from jobs, child support, disability and other sources should be included.

Planning a Family Budget Requires Everyone's Support

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Carefully review your credit card statements, grocery receipts and all bills to determine how much money is going out and don't forget about the small daily expenses. Kids downloading new music ring tones twice a month or your daily drink from the gas station adds up. By writing it down you will have a clear idea of areas where you can cut back on to meet your family budget.

When preparing a family budget, keeping it simple will ensure your family can actually stick to it. Create categories to describe various areas where money is spent. Food, clothing, school expenses, mortgage, utilities, insurance, car payments and credit cards are just a few of the categories to include. Organize your budget from top priority down with the absolute necessities placed first.

Include Everyone When Planning a Family Budget

A family is a unit, but each individual in that unit has unique needs and wants that must also be met. If you expect your family to stick to the budget plan with you, they have to be included in the preparing process. Call a family meeting and discuss why you are making a family budget. Maybe your goal is to save for a down payment on a larger home, afford a new car, or pay for a family vacation. If your family understands why the budget is important they will be willing to put in the effort to make it work.

Buying a New Family Car Means Tightening Your Budget

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Your families input should also be taken into consideration in the final budget plan. For example, you may need to budget because of your daughter's dance class or a weekly allowance for younger kids. If you have teenagers who work part-time jobs their money can also be used in planning a family budget; instead of allowing them to keep their entire check, have them place a part of it into a savings account for their college expenses.

Take Time for Reflection

Once you have decided on a family budget you need to be able to track it, so you can make adjustments and keep up with your progress. Budgeting software, such as Microsoft Money and Excel spreadsheets are popular ways to manage your expenses. Customized forms can also be found free online or you can even choose to use old-fashioned paper and pencil if it works for you.

You Can Track Your Family Budget With Paper & Pencil

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Once you are done with making a family budget be willing to cut back a little in order to keep your spending on track. Get rid of high interest rate credit cards and use cash instead as your primary means of making payments. This will force you to be more aware of how you spend your money and encourage you to be more cautious. Take advantage of coupons and generic labels when grocery shopping. Instead of a weekly family outing to a restaurant, pack a picnic and go to the park. Go on a local vacation and experience the wonders of your home state to save on gas and traveling expenses. Look for low cost and free events and places that your family can attend. A day at the beach or park, local festivals and events offer a free way to have fun and stay on budget.

Adjust as Needed

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Even after preparing a family budget, unexpected expenses do occur. Add a little buffer to cover the cost of emergency expenses and set up automatic deposits to your saving account to build up your savings. Create a category for a family reward, allowing everyone to have a chance to splurge. Call a short family meeting each week to review the budget and discuss any changes that need to be made. If your family feels too restricted or controlled by your budget, they won't cooperate. Keep tweaking and making adjustments till you settle on a family budget that everyone is comfortable with.

Please be sure to check out the other tips and strategies in Bright Hub's collection of personal and household budgeting guides.

(All photos by Photos8.com; http://www.photos8.com)