You can design a family budgeting process in a fun way by creating a family management cycle. If you’ve had an unfortunate experience of having a budget plan that isn’t executed well, with a little attitude tweaking, you can ask for the help of your family in making your budget work.
Often times family budget becomes one of many sources of conflicts among family members. Most of the time, the major earner makes the last financial decision, which isn’t always a welcome deal for the rest. Since money is such an intrinsic part of family life, families need to achieve accord in this aspect.
Family Budgeting Cycle
The following tips offer step by step budgeting that can help you budget your family money to keep up peace and harmony.
- Set your family priorities. There are aspects in your family’s life that you want to set focus on, say health or children’s future. Here your children are your family’s priority. Ideally you should focus on one but you may choose up to 3 priorities. As the priorities are set and agreed upon, write them down. Post the paper where everybody can see them to remind them of what your family is focused on for the next few years.
- List down your goals. Once the family has set and agreed on priorities, the next step is to set the goals. Goals are specific and measurable results that, when achieved, support priorities. In setting goals, you may set up a target that is both challenging yet achievable. For example, a 15% of the family’s income is a stretching yet reachable savings target for a child’s future education. To maintain focus, try to limit your family into setting 1-2 goals per priority.
- Work towards your goals. After setting your priorities and goals, start living by them. All of the family’s activities will be geared towards working at your goals. Track progress, particularly on financial goals, by using an income and expense-tracking tool. The simplest way is to get a notebook and list down all expenses and incomes and set a budget for future spending. You may also invest in budgeting software or a family accountant, if you wish. But the key thing is to have a monitoring system that can track your family’s performance towards achieving the goals.
- Evaluate your family life. At an agreed time, it’s time to check how your family is doing against the goals. Goals that have been achieved can be checked off the list, and new ones can be formulated. In major changes such as a career change or when a family member goes away, it may also be time to re-evaluate priorities. When such a time comes, then the cycle begins.
A good family budgeting process and a discipline implementation help you to focus on priorities and goals. Whenever you face budgetary constraints you are able to talk freely to all family members. By being completely honest about the bills and loans you have to pay, you can help your family understand better your financial situation and, together find the best solution.