If you find it difficult to keep your finances in order, here are some tips to help manage your household budgeting in a effective manner.
Communications
The most important point of any household budgeting is to communicate its importance as a family exercise and have the entire family participate in it. A household budget rightfully impacts all the family members, so it’s a good practice to have all the members of the family together when starting the budgeting process. No matter what you do, if the whole family does not buy into the importance of living within a budget, you do not have a budget.
- Try to communicate in terms of benefits instead of restrictions
- Work toward a agreement on spending limits for each family member
- Be reasonable and open
- Write down what is agreed to
Setting goals
Start the discussion with setting goals. You should break the goals into short-term goals and long-term goals. An example of a short-term goal could be to save for a car in a year, or maybe to clear the debt off credit cards in six months. A long-term goal might be to save for the down payment toward purchasing a house in the next five years.
Once you have the family goals listed, you’ll need to figure out the ways which expenses can be cut to meet the short-term and long-term goals. Make a list of your expenses and break them down into two columns. In column 1, put your necessary expenses such as food, housing, clothing, transportation, utilities, etc. Put discretionary expenses such as outings, entertainment, and travel under the other column. Discuss cutting the discretionary expenses first, then consider where trimming the necessary expenses might be possible.
Suggestions for cutting discretionary spending
Cooking at home
Home cooked food is healthy for both, your body and your pocket. There is no need to dine out in order to spend “quality time” with your loved ones. Instead, if you spend the same time with your family at home, you can have more fun in true comfort.
Shop wisely
Don’t shop when you are anxious, depressed or excited as you end up spending more than you actually need. Plan your shopping trips. Make a list of everything that you need before you go out to shop, and try to stick to purchasing only the things on that list. Every time you shop for one or two items you tend to purchase something more than what you require. So only shop when you need to and not when you feel like it. If you’ve set a budget for your shopping, withdraw the money you will spend into cash, and leave the credit and cash cards at home.
Record your expenses.
There is an old adage that goes like this, “Anything that is not measured, cannot be improved.” If you apply this thought to your families spending, it only makes sense to record all your expenses. You cannot change what you don’t know. Without a record, you don’t even know what you don’t know. Seeing a record of your expenses makes it very clear if you’re working toward your goals or not.
Where you might trim necessary expenses
While many expenses cannot be avoided, it’s still within your ability to control and reduce many of them.
Utilities
Turning off lights and other electronics when not in use can add hundreds of dollars back to the average American household. Turning the thermostat up a degree during hot months or down a degree when it’s cold keeps a few pennies an hour in your pocket. If there are times of day that nobody is home, consider getting a programmable thermostat and set the temperature 5 degrees opposite of what you consider comfortable for the portion of the day when nobody is home.
Food
Buy generic or store brands of staple foods like flour, sugar, tea. Use coupons for name brand purchases. We save from $20 to $75 dollars each month using coupons on the items we use most.
Involve your children.
Finally, the best way to make your children partner actively in your budgeting program is to make them responsible for it. Give each child their agreed upon allotment of the discretionary funds, make it clear that this is meant to last them the entire month. Once your children start understanding that they are in charge of their own expenses they’ll begin to spend money prudently.