07th Sep 2009
Family Budgeting
Money is an important aspect of family life. Without money, a family won’t be able to survive. A family has a lot of expenses — rent, mortgage, utilities, health insurance, food, clothing and education are just some of the expenses that families incur. When it comes to a family budget, the breadwinner often has the last say in financial decisions. Needless to say, the family budget then becomes a source of conflicts. This is why members of the family must agree and work together when it concerns the family budget. Here are four steps to follow:
Step #1: Setting Your Family’s Priority
As a family, identify your priorities and focus on them. For instance, health or children’s future may be a priority. If so, then the budget should take this priority in mind. This would involve finding a comprehensive health insurance or starting a college fund or trust fund. Ideally, there should only be one priority, but it is more reasonable to have two or three priorities. Come up with your priorities as a family. Write those priorities down and make it a point to remind family members of these priorities often.
Step #2: Listing Goals
When you have identified the priorities you have as a family, the next thing you need to do,again as a family, is to set our goals. Your goals must be specific and in line with your family’s priorities. Goals must be achievable too. For instance, if your family has identified children’s education as a priority, a goal for this priority would be something like, “Set aside at least 10% of family income for college fund.” Have one or two goals for each priority.
Step #3: Taking Action
Once you have identified your family priorities and set your goals, the next step is to actually work towards achieving the goals. This means you and your family must live with those goals in mind, doing things that will contribute towards the achievement of those goals. It is important that you track your progress as a family. Use a tool that will help you keep track of your income and expenses. The simplest way to track your income and expenses is to write them down in a notebook. Some people choose to use a software or hire an accountant. Regardless of the tool your family uses, it’s a good idea to have this in place so that you can monitor your family’s performance and how you are progressing.
Step #4: Evaluating
In addition to tracking your income and expenses, make sure to evaluate or assess your financial standing and your overall progress on a regular basis (e.g., quarterly or every 6 months). Assess your progress against the goals your family has set. See if you are on track, and where you need to make adjustments. Check off the list any goals that your family has achieved. Keep in mind, too, that families are dynamic. Some members of your family may decide to go away or start a new life. When this happens, you need to re-evaluate your priorities and modify any goals.
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