How to Create a Family Budget

Money rules every aspect of our lives, from what we eat for dinner to sending our child to soccer camp next summer to planning our next family vacation. Instead of just winging it- closing your eyes and making a wish that the check won’t bounce or the credit card isn’t denied- why not create a family budget? The thought alone may seem scary, but it doesn’t have to be. If done effectively, a budget lets you keep track of your spending and concentrate on the things you really want for your family.

Call a family meeting. Sit down with your spouse and children and talk about the importance of finances in your life. You don’t have to get into the details (in fact, you probably shouldn’t in front of your children), but explain to your family that starting now, you’re going to start controlling spending, saving money, and being financially responsible.

Make a list. Gather all your monthly bills and outstanding debts in one place and make a list of “fixed” expenses- utility bills, student loans, credit card payments, insurance premiums, car loans, mortgage, tuition, medications, things that are the same each month. In the next column, list all other monthly expenses- gas, piano lessons, dinners out, movie subscriptions, church offerings, etc. Also include a number for unexpected expenses- soccer uniforms, Girl Scout cookies, dentist appointments, things of this nature. It’s okay if you don’t have an exact figure for each item or activity, just make an approximate estimate and keep going.

Establish priorities. Review the list of expenditures and determine which items are “necessities” and which are “luxuries”. Remember that members of your family may disagree on these classifications- let each person plead their case, and take their feelings into account before making any final decisions. Just because something is marked as a “luxury” doesn’t mean it will automatically be eliminated. This process just helps you see potential opportunities to save money if required.

Do your research. Financial planning services or budget counseling services are available to help you get on the right track financially- most are even free for low-income families. Most universities, colleges, military bases, and credit unions have nonprofit financial counseling programs for which your family might qualify. These services can help you analyze your income, expenses and create spending plans. Your bank and public library are two additional resources.

Being financially responsible is one of the best lessons you can teach your children and one that they will pull from when they begin their adult lives. Creating a family budget is a great first step in planning for your family’s future.