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"The average family exists only on paper and its average budget is a fiction,
invented by statisticians for the convenience of statisticians."
Sylvia Porter
Unlike the quote provided above, seemingly reflective of general opinion
on family budgets today, we will attempt to take a much more positive approach
to budgeting, as a family oriented, user-friendly, financial management and
planning tool and life-enabler.
However, when reflecting on family budgeting and inquiring as to why not more
families are actually using it, it becomes self-evident that similar skepticism runs
rampant and deep in reality and society, even globally so.
Once you start probing family budgets, expending time and energy researching
the subject in-depth, it becomes quite clear, that most families are caught in a
vicious, almost never-ending cycle of What comes in must go out.
Most families might feel that budgeting is a futile effort, unnecessarily burdening
them with thoughts and ways, to go broke methodically and slowly, without the
creature comforts and indulgences of our human modern-day society.
Others might voice that they feel as if they are merely throwing money away, in
a never-ending and dizzying spiral of spend, spend, spend. People are getting
deeper and deeper into debt, no matter how hard they try to get out of it.
Questions are then raised : How do we stop these courses of action? How do we
change the thinking around family fiscal discipline?
Put simply, in How to set up a Family Budget, we focus in on how
to empower families to set up better, more realistic budgets, stick to them and
celebrate their successes (and learn from their failures!)
Families eventually do have a monthly surplus, see their savings start to grow,
consolidate their debt, set aside discretionary funds and personal allowances,
build their wealth and become more aware of their pro-active involvement and
responsibility regarding their lives and finances. This is when excitement builds
and fundamental thought patters as well as spending attitudes are changed.
Budgeting is seen as an accurate measurement of success when significant
behavioral transformation is taking place on the landscape of the family budget,
spending habits and financial patterns we observe over time!
Do you ever feel that you do not have enough cash at the end of the month to
pay bills, buy necessities of life? Are you barely making a dent in your credit card
debt balance, no matter how hard you try?
Here is a reality check for all of us: if we choose to spend it, it is gone for good.
We cannot spend it on anything else. Are you perhaps worried about a nest egg
for your golden years or savings for early retirement? Then you have arrived at a
source that can provide some prudent tips on how to start, finish, implement,
stick to, revise and refine a family budget.
The family budget is a dynamic process, even more so than a mere static workproduct, result, process-outcome or document. It will, can and should change
over time. It becomes a barometer of a familys fiscal circumstance, resources
and health.
Maybe budgeting is not as much about reflecting on what you cannot have, but
more about thoughts on how to stretch, invest and spend your earned dollars
more wisely. In short, it is about making your money going further.
Objectives of Family Budgeting
The objectives of family budgeting work together to help you achieve the things
you want in life, including financial prosperity. Older children will benefit from
being included in the process, as they will learn the knowledge and skills to
support themselves upon reaching adulthood. Effective family budgeting has to
account for spending that does not have receipts, such as the vending machines
at work or going to the laundromat.
IDENTIFY YOUR GOALS
Each family will have different goals, depending on your lifestyle and the cost of
living where you reside. For example, a family living in a high-priced city might
have the goal of moving to its less-expensive suburbs to find an affordable home.
Other family goals include saving for college, affording a special vacation,
planning a comfortable retirement, or starting a business.
CONTROL SPENDING
The most important component to control spending is having all family members
in agreement with the new budget. Divide the budget into fixed and flexible
categories. Fixed categories are those you cannot change, such as a housing
payment or prescription medicine. Flexible categories are those that you have at
least some control over, including groceries, utilities and entertainment. Once
the family members make a list of all spending, they can concentrate on the
objective of reducing each flexible budget category to a minimal amount. This
frees money toward achieving the goals your family identified.
are members with special conditions who need a special diet, there's also a need
for additional money to be spent for food.
2.
Shelter Does the family own the place where they live or is it only
leased? This is important to know because expenses for house repair must be
part of the monthly budget. If the family owns the property, then payment for
the real estate tax and fire insurance should be set aside yearly.
3.
Percent Annual
Monthly
age
Amount
Total Income
2000
Taxes
Net Spendable
1500
Amount
Spendable
Net Spendable
Housing
1000
Food
300
Automobile
200
Insurance
100
Debt Repayment
Entertainment and Recreation
200
Clothing
Savings
200
Medical/Dental
Miscellaneous
School/Childcare
Investments
Average annual expenses (2012) per household in the United States are: [1]
Category
201
201
201
Change
Change
2010-
2011-
11
12
Food at home
3,624
3,838
3,921
5.9
2.2
2,505
2,620
2,678
4.6
2.2
Housing
0.5
1,700
1,740
1,736
2.4
-0.2
Transportation
7,677
8,293
8,998
8.0
8.5
Health Care
3,157
3,313
3,556
4.9
7.3
Entertainment
2,504
2,572
2,605
2.7
1.3
Cash Contributions
1,633
1,721
1,913
5.4
11.2
5,373
5,424
5,591
0.9
3.1
Other Expenditures
3,379
3,382
3,557
0.1
5.2
Total
3.5%
Budgeting isn't just for poor people or for times when money is tight or
your life is undergoing a major transition. Budgeting is for everyone
because it makes it easier to achieve financial goals of all shapes and
sizes, whether that goal is to stay out of debt next month or to pay cash
for a sports car.
Budgeting allows you to make long- and short-term projections about your
financial situation, prevent crises, get the most out of your money, plan for
major life changes and enjoy peace of mind.
Budgeting monthly, rather than by the paycheck, can help you learn to
take a longer-term view of your finances. (For related reading, see The
Beauty of Budgeting.)
Keep track of all your expenses, not just the big ones. Those daily lattes
can add up!
Being flexible with your budget categories and allowing yourself affordable
rewards will prevent budgeting from being a drag and help you stick with
it.
A well-maintained budget can help you meet short-term goals, like saving
for a vacation, as well as long-term goals, like saving for retirement.
As long as you're spending within your means each month, a budget is a great
tool for helping you sleep soundly at night. You know where your money's going,
you know that you're on track to meet your financial goals and you know that
you've planned to weather the storms that will arise from time to time. If your
spending is too high for your income, a budget serves as a pesky but necessary
reminder that you need to change things - and the sooner you listen to those
irksome numbers, the better off you'll be. Living paycheck to paycheck only
works temporarily - sooner or later you will have an expense you can't meet or a
goal you can't achieve if you don't learn how to budget.