Saving money can seem like an impossible feat, especially if you have to worry about the financial needs of more than just yourself.
Luckily, making a budget as a family can help you achieve your savings goals much more easily, and with fewer arguments.
Just follow these five steps to create the perfect budget list for your household, which will allow everyone in your family to save money together while still living comfortably.
1) Talk about finances as a family
A lot of families don’t talk about finances in an open way. They may avoid the topic or have one person who handles all the budgeting and money.
And while this could work, it’s not always fair because everyone should have some say in how the family finances are managed.
If you’re looking for ways to save money and create a budget that works for your family, read on!
To do that, follow the steps below:
✓ Find out what your values are:
Sit down with the family and talk about what they want their lives to look like.
It can help to ask questions like: What do we value most?
What is our biggest priority? Who will get what job when we grow up? Having these conversations now will help you figure out where you want to be in 10 years time.
You’ll also know what sacrifices you need to make so you can reach your goals.
✓ Figure out the income and spending: The next step is figuring out how much money comes into the house each month.
(This includes everything from mom’s paycheck to baby-sitting fees) and then figuring out where it goes (rent, food, utilities).
Then take a close look at whether there are any ways to cut back on costs without sacrificing things like shelter or food (like cutting cable).
2) Determine what you need and want
To make sure you’re able to save money, it’s important that you create a budget that works for your family.
A good place to start is by determining what needs and wants are most important.
For example, if your child is starting high school next year, then tuition might be higher on your list than clothes.
Here are five ways to make sure your budget reflects what is most important:
✓ Start by making a list of all the things that you need and want in life. Then prioritize those items from top to bottom with number 1 being the most important item.
After prioritizing your items, calculate how much each one will cost per month or per week (depending on which is more accurate).
✓Make a second list of everything you spend money on every month or week, such as car payments, rent/mortgage payments, food expenses and gas costs.
✓ Determine which items are necessities and which ones you can live without.
✓ Prioritize your monthly/weekly expenditures based on where they rank in terms of necessity.
If something falls into both categories, give it priority according to its ranking for necessities first.
3) Set a realistic budget as a family
Creating a budget might seem like an overwhelming task, but it’s actually quite simple.
It starts with estimating your monthly income and then determining how much you’ll need each month in order to live comfortably.
For example, if you want to spend $2500 per month on living expenses, you’ll need a total of $30,000 annually – which means that your annual income needs to be at least $60,000.
Keep in mind, however, that this is just the bare minimum required to survive without any luxuries.
If you want to live more comfortably or provide a better life for your children (including extracurricular activities) you may need to make more than this amount.
The next step is to create categories for where you plan to allocate your money: rent/mortgage, utilities, groceries/household supplies, transportation costs, etc.
Then break down each category into what percentage of your income should go into that specific area.
Keep in mind that these numbers will change depending on whether you’re saving up for retirement or paying off debt first.
4) Automate your family finances
Automating your finances can save you time and money. Saving money is not always easy, but automating your finances is one of the easiest ways to do it.
It’s also the best way to make sure you’re saving enough for retirement.
Start by setting up an automatic transfer between two bank accounts so that funds are transferred in on payday and out at the beginning of every month.
Once this is set up, all you have to do is remember to log into your account before transferring any money or adding any new bills.
Automatic transfers will take care of everything else for you! If you get paid bi-weekly, there will be four separate transactions.
Each transaction will be slightly different depending on what day of the week your paycheck comes through.
If you get paid monthly, there will be 12 transactions – one for each day of the month.
Each transaction will be the same unless you’re going over budget, then there should be 13 transactions (one for each day).
The system may seem complicated at first, but after using it for awhile, it’ll become second nature.
You might even find yourself wondering how you ever got along without automated finances!
5) Review your progress regularly
We’ve made it our goal to save at least $100 this month and we’re working hard to make it happen! So far, so good! I’m really proud of us.
I think the best way we have found so far is by not eating out.
We used to go out once or twice a week, but now it’s more like once every two weeks or even once a month.
This saves us about $10-15 each time we skip dinner out. Plus, it means we can plan a nicer meal when we do eat out because the money isn’t going towards those meals.
It also encourages us to experiment with new recipes in the kitchen.
It’s been great having some extra cash in our bank account this month and we are already saving for next month’s goals!
One thing that has helped us save a little more is signing up for that free trial of that family fitness app
it shows you how many calories you are burning on average during your day so you know what kind of workouts you need to do (which gives me something to look forward too!)
