A family budget and management of family finances is a skill that every parent should acquire. If you are someone who regularly receives a salary, you should understand the importance of managing a family budget. A family budget avoids any unnecessary expenses and reduces financial stress. Before spending your income on anything , you need to take care of the basic things for the wellbeing and security your loved ones.
Family budget first priorities.
First you need to reserve some money for housing to provide shelter for your loved ones. Creating a budget for your family won’t do you any good if you don’t even have a roof above your heads. The total amount to set aside in your family budget should not exceed 30% of your income. This applies for rent and home loan payments.
Family budgets continued
Budgeting for transportation is also essential for your family’s comfort. School and work locations are some of the common considerations. Aside from that, car payments, insurance and maintenance all belong under this category. Speaking of insurance, the significance of paying insurance premiums and health care should never be neglected. This often requires a fixed amount every month. Staying updated with your payments can go a long way. You will have lesser worries about health care expenditures when you and your family members are properly covered.
Of course, food is crucial for your survival and it makes up around 13% of every family’s budget. Next to that, you should also set aside some money for apparel, entertainment, credit card payments, education, and emergencies. Obviously,the numbers in your family budget can change depending on how many members of the family are bringing in income. Fortunately, there are many proven family budget ideas that can help you juggle the money without losing sight of your priorities.
For example, many individuals find it effective to keep an eye on miscellaneous expenses. Although most family budgets are well-organized, there are those that eventually discover that a huge chunk of their income goes to the miscellaneous category. You need to be more specific and see where your money goes if you aim to avoid the same mistake again. So split your miscellaneous category into smaller more identifiable budgets.
Family budgets are all about the family. So, teaching your children to determine between their “wants” and “needs” can make a big change. This family budget idea is often recognized as the surest way to reduce unnecessary purchases. Teach this lesson early on and you will experience the least resistance. Special occasions such as birthdays and Christmas are perfect opportunities for family bonding, but don’t forget to set your limits. While gift-giving is a tradition most families observe, it might be a good idea to implement a system where children would learn to expect gifts only on certain occasions. A good family budget idea for these instances is to set a fixed amount in advance, so you know how much you are willing to spend. Also, consider saving long before the day arrives. Setting money aside every month in your budget for presents and family treats is a good idea.
To make things easier, many families find the envelope system very helpful. You can do the same by having separate envelopes for the above-mentioned categories and dividing your income accordingly. This way, you reduce the risks of spending money that are reserved for other purposes. It is never to late to start your family budget.