When you make a budget for your family, you dramatically increase the chances of financial success by setting specific goals and limiting the amount of money that you spend each month. Setting a budget and sticking to it will also help your children by teaching them to handle their finances responsibly.
Examining Your Expenses
Many experts advise that you start making your budget by keeping a close record of everything you spend money on for a month. This record should include everything from your mortgage payment to your morning cup of coffee. Keeping this list will show you exactly where your money goes. That’s the first step towards taking better control of your finances.
After a month, you should have a pretty good idea of how you spend your money. Ideally, you should spend about 60 percent of your income on important expenses such as clothing, food and housing. The other 40 percent should be evenly divided between long-term savings, debt reduction, short-term savings and fun money.
Making a Budget for Your Family
Most families find that they don’t fit into this spending paradigm. That means they will have to make some adjustments. Identify areas that you spend too much money on, and brainstorm with your family to determine ways that you can cut those expenses. If, for instance, you spend a lot of money on food, then you might vow to eat out less. Set aside a specific amount of money for dining out at the beginning of the month. As long as you can spend within that budget, you are on your way to improved finances.
Get your children involved with the budgeting process. It’s important for them to play a part in household decisions. It will make them feel empowered and teach them how to create their own budgets when they get older.