- What are the benefits and advantages of a family budget?
We elaborate a little more below. For most people, a family budget is the equivalent of a simplistic process: money is earned and comes in; money is spent and moves out!
It is a fluid, easy-flow, one-directional, cash management process. It is driven by daily life, a spending-orientation, or no plan at all!
For most families, income is also fixed and outflow typically increases over time, as the needs of the family fluctuates and changes. Loading up on debt is also very typical for the majority of our families. If this sounds very much like a vicious circle, it is. Most families are caught up in it and constantly battle to get out.
Mostly, we think that we wisely spend our money on necessities like food and clothing, gas and household or family needs, but can rarely put a finger on where the money actually goes, let alone produce a budget!
A good place to start is to monitor these expenses.
Take stock of your fiscal situation. Start with assessing where exactly you are in your financial life and circumstance. Most of us think we know, but we really do not.
That is, until we take the time to actually list, study and analyze the situation. Figure out what your financial worth is, look at all financial goals, and set a timeline for reaching them. Does this sound like an action plan? Where do you start?
A good suggestion is your bank statements, tax return and recent current credit report – a financial asset statement if you will -and an overview of the current situation.
The premise is simple: you can not get to arrive where you want to be if you do not know where you are today, what it will take to get where you need to be and how to get there.
A well thought out, planned and realistic budget will serve as a roadmap to get you there. It is a financial tool facilitating your financial dreams, goals and aspirations, making them become a reality. Budgeting will enable you to actually reach your financial targets and set goals.
WHAT IS YOUR CURRENT FINANCIAL STATUS?
How do you define financial worth? Is it cash in the bank, savings and checking accounts, RRSP’s, stocks and investment portfolio?
Remember, anything you have that is of value counts. All your assets form part of your financial picture and health. Ask yourself: What is your take-home pay, after deductions? How are you paid? Is it monthly, weekly, bi-weekly? Then you need to budget accordingly!
Think about all other sources of income, temporary, seasonal, part-time - extra income, found money and bonuses that you might have.
Maybe deciding to leave it out of your family budget altogether is wise and advisable? (we will delve into this question a little later).
Try to find ways to do without some small creature comforts and pleasures to reap bigger rewards later.
Starting small, early and now, with discipline and commitment, a steady, consistent pace and amount every month, tracking and optimizing financial phenomena like ‘compound interest’ (which we will describe later), will all feed into this process.
We will take this journey into budgeting together to see how it can change lives: yesterday, today and tomorrow!
Back to listing assets and thinking about savings: consider all banks, savings and loans, credit union accounts, money market accounts, certificates of deposit, Christmas club accounts you might have. ALL LIQUID ASSETS that can be readily turned into cash need to be included.
Consolidate accounts if you have too many accounts spread out and save on banking fees. Improve tracking actual spending better and more easily. Earn higher interest and have less exposure to identity theft or fraud by getting a good handle on your current situation.
For most individuals and families alike, this step is quite a revelation. It forms the basis and baseline for deeper analysis and scrutiny.
Other assets might include things like: art, precious metals, sculptures, paintings, collections, antiques, jewelry and more.
Most of us are used to having a short-term focus on money and budgeting. A paradigm-shift is required to move us towards a more in-depth, longer-range view and planning.
Set short, mid and long term goals, have a definite structured plan, read up on family budgeting, personal financials and fiscal management strategies. All of this will help us focus on what is important for our needs, requirements and circumstance, while keeping financial discipline and budgeting in the forefront of our busy lives.
This is never an easy task amidst all the hustle and bustle that is our daily lives! Here is a very healthy and wealthy way of supplementing your budget, and a surefire way of taking your health to a higher level, the absolute quick means of discovering that health is wealth. Check it out now!
Most of the published literature on family budgeting in general centers around how to get out of debt, stay out of debt and live a full and prosperous life.
Some suggest frugal living is the answer and offer ‘your money or your life’ perspectives, where you cannot necessarily have both. There are many examples advocating the cheapskate monthly makeover that focuses on shaving costs off expenses and living frugally.
Market providers both online and offline, offer various budget kits which offers worksheets and more and there is always the handy tip-like Coles notes and the pocket idiots’ guide to living on a budget.
Other sources focus on becoming totally debt free, debt proofing your life, getting a life and choosing simplicity or how to address credit card debt and expenditure.
This ‘how to’ guide is a little different.
We have chosen to take a very hands-on, practical approach to fiscal management and get you started, walking through the budgeting steps and set you up, sending you off, well and good, on-course to solid budgeting in your family and household!
This brings us to the Who, What, When, Where, Why and How part of the discussion. These form the dynamic, interacting and inter-dependent elements, systems and processes that form “family budgeting.”
Who? Every family situation is uniquely different and distinctive. There is no one-size-fits-all answer and solution for everyone.
Some of the tips in this guide might apply to your unique means and circumstance, and others may not have any significant impact or practical application at all.
In general terms, you will find handy ideas, hints, process steps, practical savings suggestions and budgeting that might have gone unnoticed before.
The information provided is general and should be evaluated on an individual and contextualized basis. Remember to consult a financial advisor when making fiscal decisions that could affect the financial health, well-being and future of you and your treasured family.
There are various different families in question here too: single-income, single-parent, blended and/or extended families, double-income households, stay-at-home mothers working part-time from the home to make ends meet, social-supported and/or subsidized families, families at risk, divorced household with shared parenting and financial responsibilities, debt-ridden or bankruptcy families and numerous others. We hope to offer something for everyone.
What? Family budgeting is a structured process and planning activity, dealing with a family’s financial resources and context.
This hands-on approach puts expense items into categories as another helpful strategy. This is done to get a better handle on the current situation and offers somewhat of a reality check to most that choose to undertake this journey.
Some of the categories could be:
- Obligations – list each item under headings like: home: mortgage or rent; association fees and professional dues; insurance: health, auto, home, renters’ and life; tuition, day care; loans: car loan, student loan, bank fees and interest; taxes, property taxes and so on.
- Necessities – again list each item under headings like : food, groceries, gas, yard maintenance, security, pest control, utilities: gas, water, electric, garbage, sewer; school lunches, household supplies, car maintenance, monthly parking, housekeeper, household repairs, internet service, dry cleaning, cable TV and more.
- Pocket expenses – treat this as a whole category, covering: lunch at work, snacks, sodas, coffee, drinks, parking, tolls, newspapers, magazines, batteries, postage, shipping, mail
- Family Allowances – another whole category including items like : parties, entertainment, weekend outing, movies, concerts, other entertainment and events, home improvements and decorating, magazine and other subscriptions, dining out and fast food, furniture
- Personal allowances - clothing, hobbies, personal recreation, books, CD’s, manicures, hair, alterations, shoe repair, personal gifts, luggage, night out with friends, gardening, films, processing, video rentals, sports/recreation, family gifts, contributions, donations, computer software and other related items.
- Budgeting should also include expenses for improving your health, as you will all agree that health is wealth, check it out here and take your health to a higher level.
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