Well this is the best way I could get this to you. I hope you enjoy!
Sunday, November 21, 2010
Thursday, October 23, 2008
Time To Get On A Family Budget
With all the hysteria around our economic world, we all have special needs to face our financial health. We are all sitting on one of two sides. Either we have been on a family budget and feel we are working toward better financial health, or it is time to get on a family budget. Being on a family budget is a little like riding a bike. It may take a month or two get get up and going and get it right, but once you've done it and been successful at your budget you can do it again and again. So I write this blog for those struggling to make and stay on a family budget.
Keeping within your family budget requires discipline and sometimes a little extra hard work. But we are adults and should act in accordance with our money as well. And just a little practice and you can be an expert at staying on a family budget!
There are 7 basic ideas behind a family budget.
1. Involve your family on a family budget.
If you are married it is extremely important to involve your spouse on a family budget. Discuss your spending habits together and develop your family budget. Be sensitive to each other and realize that neither of you always makes the best decisions regarding money. Understanding the different ways husbands and wives each view money is helpful in having a good non-condemning discussion. A good book on this topic is For Love & Money by Bernard E. Poduska. Also, if you have children old enough to understand money and the family budget involve them, get their input, and explain why you are developing a budget. For a really good object lesson so your children can understand a budget, you can use monopoly money with your real budget and income to show them where money goes.
One last note on involving your family on a family budget. If you are married, be sure you and your spouse share checking and saving accounts. Do not separate the income into his and hers and do not separate the bills that you each pay. You are a family and your money matters should reflect that as well.
2. Where is the money going?
The reason to have a budget is so that you can know and control where the money is going. Dave Ramsey likes to say that a budget is spending your money on paper on purpose before the month begins. It is a liberating feeling to be able to control your money - send it where you want it to go, instead of feeling out of control because your spending habits are based on whims or on how much money you have in your checking account.
3. Income = Total of Expenses
This is where a lot of people run into trouble. If your income doesn't match your spending you are going into debt every month. You must get on a family budget, work together, and spend less or you will soon be chained so heavily to debt that getting out will become seemingly impossible.
4. Fixed & Variable Expenses
There are 2 basic kinds of expenses on a family budget: fixed and variable. Fixed expenses are expenses that do not change (for the most part) from month to month - or those that you have very little control over. Some examples of fixed expenses are:
Keeping within your family budget requires discipline and sometimes a little extra hard work. But we are adults and should act in accordance with our money as well. And just a little practice and you can be an expert at staying on a family budget!
There are 7 basic ideas behind a family budget.
1. Involve your family on a family budget.
If you are married it is extremely important to involve your spouse on a family budget. Discuss your spending habits together and develop your family budget. Be sensitive to each other and realize that neither of you always makes the best decisions regarding money. Understanding the different ways husbands and wives each view money is helpful in having a good non-condemning discussion. A good book on this topic is For Love & Money by Bernard E. Poduska. Also, if you have children old enough to understand money and the family budget involve them, get their input, and explain why you are developing a budget. For a really good object lesson so your children can understand a budget, you can use monopoly money with your real budget and income to show them where money goes.
One last note on involving your family on a family budget. If you are married, be sure you and your spouse share checking and saving accounts. Do not separate the income into his and hers and do not separate the bills that you each pay. You are a family and your money matters should reflect that as well.
2. Where is the money going?
The reason to have a budget is so that you can know and control where the money is going. Dave Ramsey likes to say that a budget is spending your money on paper on purpose before the month begins. It is a liberating feeling to be able to control your money - send it where you want it to go, instead of feeling out of control because your spending habits are based on whims or on how much money you have in your checking account.
3. Income = Total of Expenses
This is where a lot of people run into trouble. If your income doesn't match your spending you are going into debt every month. You must get on a family budget, work together, and spend less or you will soon be chained so heavily to debt that getting out will become seemingly impossible.
4. Fixed & Variable Expenses
There are 2 basic kinds of expenses on a family budget: fixed and variable. Fixed expenses are expenses that do not change (for the most part) from month to month - or those that you have very little control over. Some examples of fixed expenses are:
- Rent/Mortgage payment
- Utilities (these may change through the year, but you can average them out over the year, and you basically have little control over what they cost)
- Insurance (incl. Auto, Health, Life, etc)
Variable expenses are expenses that you have complete control over and can easily change from month to month. The easiest example of this is Food. This is the easiest part of the family budget to change on paper and usually the most difficult to keep.
One final note on fixed expenses & variable expenses. Just because an expense is fixed does not make it a necessity. And just because an expense is variable does not make it want. For instance you may have a fixed expense of dance classes, but they are not a necessity (unless that is how you bring home the bacon) and your variable expense of food is definitely not a want.
5. Creating a Family Budget
Creating a budget does not have to be difficult. First go through and list all your fixed expenses, then go through your variable expenses (I'll provide a list here for you of common expenses) and write down what do actually spend (with the fixed expenses) and what you think you spend (with variable expenses). One important thing to remember is that most people spend from $100 - $200 more that they think in groceries. And they usually spend ~$50 - $100 more on entertainment than they think.
The last thing to remember when you are creating a family budget (you'll notice this when you see my categories) is that when you are working on a budget you plan each month for expense that you may only pay on occasion. For instance you put aside $75/month for car repairs even though you don't spend it every month.
These are the budget categories that I use for my family on a family budget.
CHARITABLE GIFTS
SAVING
Emergency Fund
Retirement Fund
College Fund
TAXES
HOUSING
Mortgage
Repairs
UTILITIES
Electricity
Trash
Water
Gas
FOOD
Grocery
Food Storage
Restaurant
TRANSPORTATION
Car 1 Payment
Car 2 Payment
Gas & Oil
Repairs & Tires
Car Insurance
License & Taxes
CLOTHING
Children
Adults
Cleaning/Laundry
MEDICAL/HEALTH
Health Insurance
Doctor Bills
Dentist
Optometrist
Drugs
PERSONAL
Life Insurance
Toiletries
Cosmetics
Office Supplies
Hair Care
Subscriptions
Gifts
Blow
RECREATION
Entertainment
Vacation
DEBTS
Note: you don't have to use each of these categories, and if you even want to simplify your categories into just the main labels I have - it will still work as long as you have enough budgeted in each category.
6. Key to Staying On A Family Budget
The key to success to staying on a family budget is to be flexible. You haven't done this before. You are just learning, give yourself a break. You probably don't know exactly how much you spend on food for instance. So it is very important to keep track of what you budgeted and what you actually spent! Then adjust the next month. I typically takes 3 to 4 months before you really have a budget that you can keep. And after 6 to 9 months you should be an expert on a family budget!
7. On a Family Budget You Are Now on Your Way to Peace and Prosperity
I'm sure you're thinking far from peace and prosperity now, you just want a little control and maybe to start getting out of debt. But I assure you as you keep a family budget you will have peace and prosperity. You will be able to get out of debt, and work with the time value of money to create a nice future for you and your family.
Subscribe to:
Posts (Atom)