Family budgeting to increase wealth
Our perception is typically that we spend our money wisely on necessities but we are all somewhat surprised by how quickly and where our money goes. To stretch our hard earned dollars, reduce debt and save we need to set up and stick to a budget. No matter what a family’s financial situation, setting up a budget for your household will make dollars go further. Despite the fact that our skill levels range from expert to novice, setting up a family budget is not daunting.
Your chances of success are multiplied if you have a high level of motivation, are positive about the task you are undertaking and you approach your budgeting task with a sense of realism. You must have a clear knowledge of your household expenses and liabilities. Don’t expect that you will achieve a quick fix for fragile finances but with time and effort on your side you will be able to accomplish financial discipline.
One key element is communication, particularly with your spouse. You need to understand one another’s role and perspectives to set up a budget that will work. To increase your chances of being successful you need to discuss your attitude, expectations and motivation to work consistently together.
To alleviate any initial discomfort and apprehension set aside plenty of time to analyze your family’s financial situation with your spouse. Search together for tips and strategies that you think would work for your household. Set up a draft budget then critically appraise it. Think laterally about the best way to achieve your goals. Be sensitive towards family members when considering suggestions and amendments.
Openly discussing and exposing your family’s finances to close scrutiny can be very confronting and challenging. Feelings of discomfort and apprehension will be apparent at first. But these anxieties will soon be replaced by feelings of emotional security and control as your budgeting begins to work positively for your family.
A good place to start is to make detailed lists of all expenses. It is helpful if you categorize. Living expenses would include food, home expenses like cleaning products and gardening, lunches for work and school, clothing, newspapers, stationary and postage. Family expenses might be child and elder care, pharmacy, veterinarian if you have pets, health and life insurance and doctor and dental. Dining out and take away meals, vacations and weekend or day trips, books, movies and rentals would all be placed in the recreation category.
The living expenses category will probably be very extensive. Include in this category all day-to-day expenses like grocery items, fruit and vegetables, repairs, replacement costs of household items and any new furniture or household items that you purchase.
Living in a house or apartment and having a car are usually major budget items. Whether you rent or have a mortgage you will have to budget for monthly payments as well as utilities (oil, gas, energy, water, garbage, sewage). Cost to maintain telephones, both landlines and cells, cable and internet services are substantial. We are prone to forget items like escrow (taxes and insurance) and repairs and maintenance and if these are not included when a family is setting up their budget an unexpected cash flow problem can arise.
Whether you choose to own a car or several vehicles, ride a bicycle or catch public transport you will need to include transportation as one of the categories in your newly formulated budget plan. Loan payments, insurance and repairs and maintenance need to be paid for more regularly than we would like. Parking fees can mount up very quickly. Fines for traffic misdemeanors are usually large and if they are not dispensed with by speedy payment substantial late fees will escalate. The cost of fuel seems to be affecting almost everything and price increases are apparent in all budget categories. Fuel costs now need to be considered more than ever before!
Financial discipline does not happen overnight. You need to work consistently to make a real difference in your spending and saving patterns. It may not be possible to reduce some costs but with a determined effort you will find it financially easier to meet these. Good luck.
