In our families, many of us have experienced highs and lows in terms of our family budget. Our family income waxes and wanes through the years, such mom giving up her job after childbirth. Add to that unexpected family emergency and the family budget can be really thrown out of balance.
- Related: Mommy Tipid Tips to Beat Inflation
Does your family budget need revival?
If you are experiencing money problems right now and you want to get your family budget on track, you need a sound financial plan. The best way to get started is to establish a family budget that every one is aware of and willing to work on.
These are rather simple steps to quickly get your family’s budget back on track.
Step 1: Track your Income and Expenses
The first thing you must do is know how much money you have coming in and what you need to spend on. You should gather information on your bank accounts, bills, pay stubs from work, or anything else that will help you determine your current financial state.
These are all the basic financial information you need to know. Once you have it all together, you can begin the process of creating a family budget.
Step 2: Set Some Financial Goals
Not only should a family budget help you stay on track with your current expenses, but it can also help your family reach financial goals. These can include short-term goals like paying off a credit card, reducing the cost of groceries or utilities, and long-term goals like saving for college or retirement.
It can be tempting to put off these things when you are struggling to make ends meet in the present. But these are important steps to protecting your family’s future, so make sure to include them as part of your budget.
Step 3: Create an Emergency Fund
Another critical part of your budget should be an emergency fund. Building savings for emergencies can help protect your family when unexpected expenses occur. And it can help prevent you from reaching for a credit card in times of need.
Consider including life insurance as part of your financial plan. It will protect your family in the unfortunate event that something happens to you or your spouse. It is also a good idea that both spouses have wills set up.
Additionally, you might also want to build up a help fund. It’s a certain amount that you save up each month that you can use when somebody needs help. That way, your family budget remains intact even when you get to help a friend or another family in need.
Step 4: Eliminate Your Debt
To truly experience financial freedom, you need to be out of debt. Make it a top priority in your family budget. There are several different ways to eliminate debt, such as the snowball plan for quick victories. Or you can start by paying down the card with the highest interest rate first.
- Read: Tips to be Debt-Free
There are arguments for both these plans, and there are also other ways to whittle down your debt. The key is to find a plan that works for your family and do it until your debt is paid.
Step 5: Plan for Taxes
Did you know that many people overspend on their taxes every year? You don’t have to give the government more of your money than what is required by the law. But if you aren’t up to speed on the current tax laws and deductions, you just may be doing so.
Choose the right filing status and take advantage of various tax credits available to citizens. One of these is the child tax credit.
Step 6: Get the Whole Family Involved
As the name suggests, it is a family budget. The budget is for the whole family — by the whole family. For your plan to work, everybody should know of the family’s financial situation, what needs to be done, and everyone’s role. Younger kids will have a different understanding about money than older kids, of course.
But you can start teaching kids how to budget money at any age.
Show them the whole picture of the family’s financial situation and give them responsibilities towards reaching your family’s financial goals. These will toughen them up and make them feel responsible.
If you reach a milestone, inform them, too. That will give them a great sense of victory and satisfaction with being able to help in the family.
To Sum It Up
Money can really be a big issue in our families because, let’s face it, we need to spend money in order to live.
But with a little planning and preparation, you can protect your family’s financial future and get your family budget back on track.
One of the ways that you can extend your family budget is to let go of some things you don’t use. You can sell them or barter them for things you need, like home essentials. Read: Mommy Tips for a Successful Barter Experience. That way, these items can already be slashed from your monthly expense.