Often times, the family budget is a source of conflict. Most of the time, the major earner makes the final financial decision, which isn?t always a welcome deal for the rest. Since money is such an intrinsic part of family life, families need to achieve accord in this aspect. There is a four-step cycle in budgeting the family money to maintain peace and harmony.
1. Set your priorities.
Priorities are different from goals. They are aspects in your family?s life that you, as a family, want to set focus on, say health or children?s future. While goals are specific targets that support priorities.
In setting priorities, do not set too many as it defeats the purpose. Ideally, there should only be one, but because life is not ideal, 2 to 3 are reasonable.
As the priorities are set and agreed upon, write them down. Post the paper where everybody can see them to remind them of what your family is focused on for the next few years.
2. List down your goals.
Once the family has set and agreed on priorities, the next step is to set the goals. Goals are specific and measurable conditions that, when achieved, will support the priorities.
In setting goals, establish a target that is both challenging yet achievable. A 10-15% of the family?s income is a good savings target for a child?s future education: stretching yet reachable.
Try to limit your family into setting 1-2 goals per priority, to maintain focus.
3. Work towards your goals.
After setting your priorities and goals, start living by them. All of the family?s activities will be geared towards working at your goals. Track progress, particularly on financial goals, by using an income and expense-tracking tool. The simplest way is to get a notebook and list down all expenses and incomes and set a budget for future spending. There are those that invest in computer software or a family accountant. Whatever it is, the important thing is to have a system of monitoring the family?s performance towards achieving their goals.
4. Evaluate your family life.
At a certain point in time, when you feel like it?s time to evaluate your life, check how your family is doing against the goals. Goals that have been achieved can be checked off the list, and new ones can be formulated.
At times, in major changes, say a career move, or when a family member goes away, it may be time to re-evaluate priorities. When such a time comes, then the cycle begins, just like what it?s for: life!
I love this advice because it focuses on how budgeting involves so much more than dollars and sense. In our case, it is important to our family that I work from home, so many points in our budget are centered around that. Some expense categories are lowered, as there is no transportation expense, and our food costs are less because I prepare meals at home. I do need to fund my own retirement, however, so money must be set aside each month for that. I think everyone would benefit by thinking through their goals and tailoring their budget according to those goals.
I was told that money is the number one reason for divorces. It seems people argue more about their finances than any other topic and when it gets to the boiling point, the marriage is over.
That seems a shame given it is so easy to lay out the family finances so that both parties can see the whole picture. When both parties are on the same page, it would seem a decision is relatively easy to make.
Budgeting is the first step. Write it out, review it and monitor it. What's hard about that?
Oh, sticking to it. Yeah, sticking to it seems to be the problem.
OK, make that step 2. For many of us, that is easier said than done. But, it can be accomplished if we adopt a mind set that says something like come hell or high water I will not violate my priorities which are laid out in my budget.
Step 3 - do it!
Yeah, I think Jerlene is onto something.
