Creating a family budget can seem like a daunting task, but it may surprise you how much a family budget can bring you together and give the family a common goal.
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Looking to have a good time with your family together? How about creating a family budget?
Before you back down in horror, listen to us. Creating a family budget can seem daunting, but it may surprise you how much working on a budget can create a common goal.
âLet’s face it. It’s very important to have a budget in place,â says Robert Siuty, senior financial advisor at TD Ameritrade. âWithout a budget there is no set direction. There is no set direction. solid foundation, so why not make it a family affair?
Nancy Doyle, whose latest book is Manage Your Financial Life: Just Beginning Out, agrees. âThis is such an important topic for couples or for a family because it lays the foundation and everyone is on the same page. For parents, you are teaching your children such important lessons, âshe says.
Break it down
âIt comes down to goals,â says Siuty. He suggests that families write down all of their goals in order of importance. âCreate a spreadsheet and break it down by income and expenses for the month, see if there are any expenses you can reduce or possibly eliminate by giving yourself extra dollars to save,â he says.
In his book, Doyle says the rule of thumb for a monthly family budget is 50-30-20, where 50% of your spending goes to essentials, 30% goes to non-essentials, and 20% goes to debt repayment. or construction. savings. If you’re having trouble saving, download all the data from your financial institution and identify where you can make changes.
Doyle did this personally a few years ago and was surprised to learn how much she and her husband were spending on their children’s activities. And it’s not just adults who spend mindlessly. âYounger people probably spend a lot more on carpooling than they think,â she says, adding that eating out is a big expense for everyone.
If your family tends to recklessly overspend, Siuty suggests treating savings as an expense. âMake it part of an engaged campaign or forced savings,â he says. “These little savings can really add up over time.”
Share and share the same
Depending on the age and maturity of the children, you may not want to open all of your financial books to them. But at a minimum, gather information on non-essential expenses and discuss as a family why it is important to prioritize spending in the household budget.
âYou can even make it a game where everyone thinks of an idea to reduce. I’m a big believer in your goal articulation, âsays Doyle.
If you reach a goal of saving more than $ 100 per month, reward yourself. Take some of that savings and do something special, she says.
Setting priorities can be tricky, especially with children. âYou don’t want the kids to feel guilty for using the resources you provide them, but they also need to realize that they can’t do everything. It’s time and budget, âsays Doyle.
It may be easier to approach budgeting if parents can combine the two topics: âHow do you like spending your free time? What activities do you enjoy the most? â Such questions are especially important in a world of overworked children. âIt’s a great way for them to prioritize in terms of spending associated with these activities but also their time,â she says.
When it comes to budgeting for non-essential items, consider categories and enforce limits. This is especially important when using apps like Venmo, which lets you pay friends with one click, she says.
Depending on what is important to the individual, the non-essential categories could be subdivided and each prioritized with a monthly spending cap. Some categories include clothing, dining, ridesharing, online movie or TV expenses, and online games.
Don’t forget about charitable donations. Doyle says her family realized she was making small donations to several organizations and instead decided to focus their donations on a few favorites. Have each family member research a charity and introduce the family to why that charity is worth supporting. It also reinforces the shared values ââof the family.
âWith our family, we focus on a few things and share with the kids what our priorities are,â says Doyle.
Finally, when planning that family budget, be sure to indulge yourself every now and then. âYou still need to live a little bit,â says Siuty. âSo reward yourself for reaching a certain milestone. “
Debbie Carlson is not a representative of TD Ameritrade, Inc. The materials, views and opinions expressed in this article are solely those of the author and may not reflect those owned by TD Ameritrade, Inc.