The holidays are literally right around the corner. These times are often filled with excitement, family, gifts, and joy. However, after the holidays, many families realize they have seriously overspent. It should not be surprising that one of the top 10 New Year’s resolutions usually has something to do with getting out of debt or making better financial decisions.
I would like to share 10 tips that have helped my family create and maintain a successful family budget:
1. Buy-in from both partners is necessary.
I have learned that is critically important; both partners have to be active participants in creating and maintaining a family budget. Create the budget, agree upon the budget, and make the budget work – together! If only one partner is trying to make the budget work, it will not work! You have to work as a team if a family budget will be successful. Treat the budget as a contract that both partners agree to abide by.
2. Meet each pay period to discuss the budget.
I have learned that creating a budget at the beginning of the year, then never revisiting it, does not work. A family budget becomes easier to manage and maintain if it is revisited and discussed often. Both partners should meet each pay period to discuss the budget and expenses. No pay period will be exactly the same. Therefore, meet each pay period, to discuss and adjust the budget. This will help manage the needs of that specific pay period. Also, be flexible from pay period to pay period. Each pay period may be different and the budget should be tweaked. Don’t be rigid and force each pay period to be the same; this can lead to frustration and thus failure.
3. Don’t set yourself up for failure.
Be conservative when determining the amount of money to allocate toward savings and/or paying off debt. I’m not saying don’t be aggressive in these two areas, but be honest and reasonable with yourself. Do not over-allocate these areas of your budget and then struggle to meet your other expenditures for the pay period. Struggling to meet your other expenses, because you have allocated too much to savings and/or debt payoff, can lead to extreme frustration and thus failure.
4. Account for every dollar.
When it comes to your budget, every dollar should have a name. You need to decide exactly how you will spend and/or save every dollar. This is part of the Dave Ramsey, Financial Peace Plan; for more detailed information click here.
5. Utilize technology and apps.
Developing and maintaining a budget is not always the easiest and most fun thing to do. However, there are numerous tools that can greatly assist with a family budget. There are tons of websites and smartphone apps that can help you develop and monitor your budget. It is also critical to track your spending, monitor purchases, and check bank account balances regularly. Mint, Wally, GoodBudget are just a few of the apps available for budgeting. Additionally, most banks and credit unions have their own apps.
6. Involve the children.
Involving the children in the family budget can be a great teaching tool. I don’t believe children should be privy to the financial decisions, but I believe that there are times you can include them. Including them can set the foundation for teaching them about finances.
7. Resist the urge to make emotional purchases.
I have been guilty of this often. Shopping can sometimes be therapeutic and now that we have so much online shopping available at our fingertips, it is difficult not to make emotional shopping decisions. Also, there are times you may find a great item on sale. Sometimes it is difficult not to buy something at a great price, even if you don’t need it. When making a budget work, become determined not to make unnecessary emotional purchases.
8. Plan for holidays, vacations, and special events.
Holidays, vacations, and special events can really interrupt your budget. Vacations, birthdays, and anniversaries are really important to me and I love to celebrate them. I have found planning ahead and saving a little each pay period will cause less financial stress. Many credit unions have special saving accounts, such as Vacation and Christmas accounts. These are good ways to save a little each pay period to pay for these special events and holidays without interrupting your regular family budget.
9. Plan for emergencies.
I know this a bit of an oxymoron. However, we can be certain that sooner or later an emergency will occur, whether it is a car repair, home repair, or medical emergency. We can plan for emergencies by saving a little each pay period. Emergencies can completely abolish a budget, but planning in advance for them will lessen the financial burden of emergencies.
10. Be accountable to each other.
My first tip was to have buy-in from both partners. Not only should both partners completely engage in the budget, but both partners should also be accountable to each other. Accountability will increase the success of the family budget. If you are a single parent, find an accountability partner.