Getting your entire family involved in creating a household budget can be a great way of dealing with stress caused by money... and finding workable solutions. By engaging family members, you'll likely receive some excellent input, suggestions and agreement to enhance your financial situation and "balance the books."
Before sitting down with the family, start the process by crunching your monthly household income and expense numbers. This will give you a clear picture of how much your family earns, how much family members spend, and if there is a shortfall between the two sums.
Once you understand your financial picture, schedule a time to sit down with your family and discuss the household budget. You may find it useful to present your information in graphical form so that younger family members can more easily understand your money situation and what needs to happen.
Reducing any Deficit
Armed with your financials, illustrate how money gets spent and suggest areas for improvement. If your family spending exceeds income, then candidly discuss the shortfall on a category-by-category basis. Ask for ideas on what expense can but cut or eliminated.
Finding the best ways to reduce your outgoing funds is the best way to get everyone involved in the budgeting process. Start by breaking the spending into different budget categories, such as food, utilities, housing, transportation, phones, and entertainment.
Try to use different colors to identify the spending habits of each family member. This will help each person think about his or her own spending habits – and where savings can occur.
Be sensitive to the the fact that older kids and teenagers may think this process is a personal attack and may start to justify every cent they spend. In these situations, stay calm and explain that everyone's spending is different... and needs to be different. Yet, each family member will have do their part to help bring spending in line with earnings.
It is important to note that earning extra money should always be left to the adults, even if your child generously offers to add his or her paper route earnings to the household budget coffers.
Although, when your child earns his or her own spending money, allowances for helping around the house may be eliminated or reduced from your budget. See more on this below.
Moreover, this process may serve as an excellent opportunity to introduce your child to the idea of budgeting and the importance of saving money.
Some Ideas for Reducing Expenses
If your family members are very young or very stubborn, they may find it hard to come up with ideas to help balance the household budget. As a result, you may want to suggest some of the following ideas:
Re-use and recycle – Sometimes part of the budget problem is replacing old or unused items, including toys and games for your children. Ask your older children to clear out their closets and offer things to their younger siblings, as a way of saving money.
In addition, introduce the idea of giving nice second-hand gifts from thrift stores instead of sparkling new, store-bought items. For special occasions or holidays, establish and agree upon a specific amount that each individual can spend for a family member's gift to keep spending in check.
Small Sacrifices – Each person in your household will have his or her favorite expenses, whether they be a gym membership, daily bottles of soda, or downloading music. Ask each member to make a small sacrifice each week.
For younger children, create a reward chart to track each time they could have bought something and chose to save money instead. For older children, you may want to place a sliding-scale value on the sacrifice depending on age. In the end, each member of your household needs to agree to adhere to the family budget policy.
Reduce allowances – This is unlikely to go down well if you give your children weekly allowances for doing some chores around your home. Be equitable and fair with each child and possibly offer the option of earning extra money for additional household duties.
Of course, if your child is earning his or her own spending money by babysitting, mowing lawns or doing other part-time work, then this is an opportune time to eliminate allowances. Replace the allowance with additional privileges to acknowledge your child's contribution to helping around the house.
The key to making a successful household budget is to listen to all ideas and agree on a plan of action. If one person perceives the system to be unfair, spending habits will not change. Then, expense-cutting strategies will be ineffective.For more information on household budgeting, please see the article links below.