Top Ten Tips for Better Family Budgeting

‘Living within ones means’ is the most basic principles of financial prudence. Most financial problems originate from people spending more than what they earn.

Budget is the roadmap to your financial independence. It helps you to stop worrying and start ‘enjoying’ your money- rather than compromise your future for a few moments of pleasure today. A budget shifts the power from money to you. You manage the money rather than money managing you.

The idea of budgeting is not to restrict your spending, but to make the best of what you have - in a planned manner. Here are some tips to making your budgets work for you.

1. A goal-oriented budget

Have goals in your budget. For example, decide that you will buy the home theatre through savings over the next say 3-4 months, instead of using your credit card and creating a debt.

This will make budgets interesting and something worth looking forward to. If budgeting becomes just balancing your income and expenses, it will get boring and soon everyone will lose interest.

2. Budgeting is not just your baby

Budgeting is and should be a family affair. You cannot be solely responsible for the family budgets. Your spouse and children have an equal part to play.

Make everyone understand what the family incomes are, how much is spent on essential items such as food, rent, electricity, fees, gas, traveling etc. and the mandatory savings. This will give a fair idea to everyone as to where they can spend and where they can’t.

3. Budgeting can be fun

Many times you may be hard-pressed for money. With a little bit of creative budgeting and cutting corners somewhere you can save some money for a family picnic. This will create lot of fun and excitement, as you all will get a feeling of accomplishment.

4. Challenge yourself

People take certain expenses like electricity, gas or traveling for granted. Challenge yourself to find ways to reduce them.

You can park your car a mile before the shopping mall and walk-up to the mall. You save gas for 2 miles. You keep yourself fit by walking and save on medical expenses. Still better, you need not go to the gym and save yourself the gym fees. All these small savings add up to quite a lot at the end of the year.

5. Forget about credit cards

A credit cards has the potential to blow apart your budget. With all the goodies available in the malls, it is but natural to get tempted. If you carry a credit card, you don’t think much about how you will pay for it. As this debt keeps accumulating, your budget goes for a toss and you can get into a serious debt problem.

Dump your credit card and get only a debit card. Keep only a small amount in your bank. This way you will automatically avoid overspending.

6. Budgeting does not require 100% accuracy

Budget has to be detailed. But too much detailing would make it tedious and sooner than later, you will forget all about budgeting. The intention is to strike the right balance.

You need not list down 100% of your expenses. Even 80-90% may be enough to achieve the purpose of budgeting. This is not an exam where you must get the perfect answer.

7. Buying the best-of-the-best may not be the best thing to do

You buy the best mobile phone in the market, packed with a host of features. However, usually you use only 25-30% of them. Then why pay for the 70%, which you won’t really use? You have a digital camera. Do you really need one in your phone too? Think.

Buy utility things rather than jazzy ones. You will save a lot of your hard-earned cash.

8. Budgeting helps build healthy relations too

Tensions arise in family if they are not aware of the household finances and you keep refusing them things they want to buy. Money is one of the prime reasons for divorce.

If you are open about your finances, a lot of misconceptions will disappear and improve your relations with your family.

9. Building a safety net

Financial emergencies can happen to anyone. Job loss, natural disasters etc. can be really devastating. Would you like to then run around and arrange for cash? Or would you prefer having an emergency fund, which you can draw upon?

A little bit of care in building your safety net will save you a lot of trouble.

10. Be flexible

With time, your incomes, needs and expenses, all will change. Therefore, be open to changing your budgets. A budget is not something cast in stone, that it cannot be changed.

Finally a warning – preparing a budget is the easier part of the job. The difficult part is adhering to it – month after month, year after year. You have to be patient, committed and determined, or else it will end up as only promises and no concrete result.

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