Some people cringe at the mere word "budget." It's difficult enough to keep yourself in line by carefully planning and restricting your spending. It requires setting aside some time and cultivating a good deal of self-discipline. Add a family to take care of, and budgeting gets all the more complicated.
Parents know it all too well. Wherever kids see new products, whether on TV or in the store, chances are they'll ask for things. In today's commercialized society, it's more difficult than ever to foster financial discipline in your children. How can you encourage them to be happy with what they have when they're constantly barraged with cool new things to get? And, most importantly, how do you plan your expenses while keeping plenty of food on the family table and clothes on everyone's backs?
Fortunately, there are budgeting tips that might help you keep you and your family in line without having to sink into debt.
Track Your Family Income and Expenses
Of course, there's no avoiding this time-consuming step of writing a budget. Though you may consider yourself financially savvy, chances are you can't keep all the necessary details in your head. It'll help to actually sit down and track your money.
You'll need to record your income and expenses over the past few months. To get an accurate assessment, gather your bank statements, paycheck stubs and bills. If you use online banking, this might only require logging in to see exactly how much money comes and goes. Ideally, start collecting your detailed receipts ahead of time. The more detailed you're able to get, the better you'll be able to assess where your money goes.
Income for salaried workers is steady and easy to record and predict. But others who work hourly or whose income fluctuates will have to take more general estimates and plan for changes in their budget from month to month. Likewise, expenses can be fixed and always the same amount (like a monthly Internet bill), or unfixed and fluctuate based on the season or month (like energy and gas bills, or groceries).
Finally, categorize and sum up both your income and expenses on a monthly basis. This will allow you to visualize your monthly financial activity easily.
Assess Needs Versus Wants
The next step in writing a budget for a family is to draw some hard lines between what the family needs and what it merely wants. This isn't as easy as it might seem, and each family will have to decide this on its own. Take food, which is in itself a necessity. But what kind of diet is the family willing to settle for -- especially when it might mean sacrificing what's considered the healthiest options? The first step is, of course, to eliminate unhealthy food items. But after that, it might be difficult to juggle the health benefits versus the price.
Even clothes can be a judgment call. Working adults might require a polished wardrobe for their career needs. And most parents don't want to make their children uncomfortable by sending them to school wearing old or tattered clothes.
Internet access has arguably become a necessity for nearly every family nowadays. Work and school needs might require it. But do you need high speed Internet? You might be able to find a cheaper deal that still reaches your needs.
It will help to prioritize your needs and wants. Once you've examined what you can afford, you might even be able to include some important "wants" into your budget.
Plan Your Spending and Set Goals
Once you have a good, detailed picture of your monthly spending habits, as well as a prioritized list of needs and wants, you can begin the painful but necessary step of planning your budget. If you find you're losing money and digging the family into debt, your first priority will be to limit spending and start saving. The first saving goal should be an emergency fund.
But long term financial security also involves setting bigger goals with the money you're able to save. Is college on the horizon for your kids? Are you worried about having enough for retirement down the line? Setting concrete goals will not only help you plan for the future, but probably also give you more motivation to stick to a budget. If you can fit short-term goals in, like vacation plans, it will feel great to have these rewards in the not-too-distant future, too.
So, if you're losing money, or not saving enough for your goals, it's time to take a cold, hard look at everything you can cut out of your expenses. Use your prioritized list of needs and wants to help you make difficult decisions.
Consider what you can do to improve your income as well. Can you work overtime? Ask for a raise? Take a second job? If one parent isn't working, taking a full- or part-time job is a possibility.
Use Grocery Lists
Food is one of the biggest necessary expenses for families. What's worse is that watching your wallet might tempt you to opt for cheaper, unhealthy foods. But if you have the discipline to prepare meals at home, you can maximize your spending power and eat well. Initial costs might be a bit bigger -- such as buying in bulk sizes and collecting a modest spice supply -- but will be more cost effective in the long run if you plan ahead of time.
Making grocery lists (and sticking to them) is essential to a food budget. Don't let you or your kids be distracted by impulse purchases, especially junk food. One idea is to plan your grocery budget with the intent to spend more on the foods with the most nutritional value, like fruits, vegetables and grains. Then, spend moderately on protein and moderately healthy foods, like meat, eggs and dairy [source: NZFFBS]. Before you go out to the store, take inventory of what you have at home and plan your meals around using what you have already.
Time could also be a factor. If you're already working overtime to help pay bills, buying a quick, cheap burger at a fast-food restaurant seems easier than taking the time to prepare and cook a meal at home. Instead, try preparing larger meals when you have the time so there are more leftovers. Also, keep a supply of fruits, vegetables and healthy snacks, like yogurt and granola, that can sate your hunger throughout the day and won't require lots of preparation.
Research the Best Prices
Some grocery store chains tend to carry better deals than others. If you can set aside some time to list the food products you typically buy, and compare the costs among local grocery stores, you'll get a general idea about which will give you the best deal. But don't stress over individual items. It's probably too difficult and time consuming to split your grocery trip up into multiple stops for particular items.
As we've already discussed, as long as you know what to look for and avoid in a supermarket, you don't have to shop at pricey organic markets to eat healthy foods. A smart shopper is a frugal shopper, and this doesn't just apply to food. When the family is on a budget, you should research any significant purchase ahead of time.
Companies like to offer coupons to entice customers to try products and brands they otherwise wouldn't. However, as a savvy shopper, you can take advantage of this service by looking for coupons on things you already need and buy regularly.
Another trick is to combine deals if possible. For instance, save coupons for things you think you might need soon, and then keep your eye out for sales on that product. Or you could get discounted gift cards and make your purchases during a seasonal clearance [source: Pate]. The savings can be particularly significant.
The keys to coupon saving are flexibility and organization. You need to be flexible about the products you'll get, and not loyal to a particular variety or brand. However, it wouldn't be wise to buy anything you know your family won't use. It'll also help to have a system for organizing the coupons you find. Cut them out of newspapers or print them off the Internet, and keep them in a special container or pocket book. Some coupon experts recommend categorizing them or sorting them them by expiration date [source: Drenth].
Use Hand-me-downs and Buy Used
The costs of providing clothing for a family of children who are constantly growing can rack up. Every new season will require a new wardrobe. Big families are used to the age-old cost-saving rituals of hand-me-downs, which is passing clothes down from one child to the next as they grow. It's nothing to be ashamed of and a great way to encourage family unity and cooperation. Also, consider sharing clothes with neighbors and friends.
Along the same lines, it's a good idea to consider buying used items. Thrift stores and consignment shops are great places for bargains if you have the time and patience to search them. And this goes beyond clothes. For every big purchase, think about whether buying used is feasible.
Revisit the Family Budget
Another key to budgeting is to regularly check how you're doing. A family that has a lot going on can easily lose track of certain expenses or not realize that certain bills are adding up more than they used to. After your first month of trying to stick to a budget, sit down again and see how the family did.
Don't be too hard on yourself if you fail to live up to your budget goals at first. You might need to re-evaluate your budget if you made it unrealistically strict, or you might not have realized how much you were spending in a particular category. Self discipline doesn't come quickly, after all. Every budget will require tinkering, and you can't expect things to be easy or perfect the first time you try. The important thing is to not get discouraged. On the other hand, if you did very well, that might be a sign that you can further tighten your budget to save even more.
Once you do get used to your budget, don't assume you'll always stick to it. Check again every month or so to make sure. And remember to account for new and seasonal expenses, like higher energy bills in the hot summer months, or the costs of Christmas gifts in December.
Redo the Budget When the Situation Changes
In the chaos that is family life, it seems the only thing that's constant is change. The biggest and most dramatic changes usually have to do with losing and switching jobs. This will directly influence your income, which has a big impact on your budget. Ideally, having already been on a budget, you will have saved up for an emergency fund to use in the event of losing a job. But you'll want to make your budget stretch even more during that time, just in case.
Whenever your long-term goals change, revisit your budget to re-evaluate your situation. Perhaps you'll find that a new baby is on the way, or a family member is diagnosed with a medical condition that will require expensive treatments. Or, as time goes on, your priorities could simply change. You may decide that you'd rather delay that European vacation, and instead put your savings toward a down payment on a bigger house. Each major change in your situation or priorities will require looking at your budget in a new light and making adjustments.
Involve the Children
Many parents worry that starting a budget will upset their children and family peace. If your kids aren't used to hearing "no," it will certainly be an adjustment for them to suddenly learn that money is tight. But instead of letting the budget be a burden on your family relationship, use this as an opportunity to teach them about financial discipline -- something the whole family can learn and work at together.
One strategy to keep things positive is to avoid the word "no." Instead, when your young child asks for things, tell them to keep a list of what they want and prioritize the list. Later, you both can revisit the list and talk about it. Teenagers can learn money management by being given a precise budget for their essential purchases, like clothing [source: Ginsburg]. Also, let them in on your process. Show them the budget itself, and teach them the tactics you use to find good deals, like Internet research. Some teenagers might be willing to get jobs and contribute some of their pay to the family funds.
In the end, you could end up turning the need for a budget into a blessing. Kids and parents alike will ultimately learn a deeper appreciation for the things they have. And the communal struggle could make your family closer than ever.
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