How to Prepare a Family Financial Budget? Here are The Tips

Family Financial Budget – How to prepare a family financial balance? This is one of the most coveted questions and sometimes not all families know how to answer it well. In the following article we will talk more simply about how to prepare a family financial budget, let’s see!

Taking stock of family finances can be a very difficult process. One of the challenges is changing a mindset that only pays attention to personal financial needs to balance the needs and desires of partners and family members.

Without wasting time talking intensely about money with your partner (husband / wife), this topic will be stressful later on. Long-term success requires a budget commitment as a couple. Here’s what you can do to start planning your family’s finances properly. (Also Read: 5 Ways To Create An Effective Family Budget)

Prepare a Family Financial Budget Starting from the Basic Foundation

Before you sit down to work out a family budget with your partner, spend time together discussing each other’s financial habits, goals, and desires. Understanding each other and how you and your partner view money can help provide a solid foundation on which to move forward.

Understand that different styles are not a question of “good” or “bad”. This stage is actually about knowing your partner and being honest. When each understands the other, it is easier to know how to proceed with the next process.

If your partner seems hesitant, you may need to change their approach to finances. See if you can make it a more positive experience and frame the situation as a team effort to work out the best family budget together.

Determination of the needs of the family

Determining the needs of all family members is an important part of preparing a family budget. Image credit:

If you can understand each other’s financial style, now is the time to determine the needs of the family. This includes expenses such as groceries, car / home loan payments, debt payments, utility bills, and so on.

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There is some leeway as to how much money is spent on these needs. You can save money in a number of ways, such as by spending less, buying a cheaper vehicle or reducing the amount. But please note that this obligation must be fulfilled before spending on luxury goods or extra (extra) items. (Also Read: 6 Ways To Save Monthly Money On A Tight Budget)

As a couple, prioritize needs over wishes when setting a family budget together. Be detailed about what comes first and why. Also, if one (or both) is in debt, find a way to resolve them together. You need a debt management plan so that you feel comfortable.

Creating long-term family financial goals

It is very important to set family financial goals to work on together. These long-term financial goals should be part of the individual’s financial plan. This financial plan can help you and your partner determine how quickly you can buy a home or help plan your retirement or dream vacation with your family.

If you or your partner have specific goals to achieve each month, it can make budgeting a lot easier. If you’re just limiting your spending and saving for no particular purpose, it’s easier to “justify” spending too much on a regular basis.

Some good initial financial goals, like getting out of debt and starting saving for a down payment on a home. You should also make retirement savings an important part of your family’s financial plan.

  • Make a plan to pay off the debt. Make a list of all debts of each individual and start paying off one by one.
  • Set clear savings goals and define when you want to reach each financial milestone as a couple. A clear financial plan will help you get ready to buy a home or move on to the next step.
  • Search for information on profitable retirement accounts and start contributing to savings in those accounts.

Address individual needs

After determining the needs of the family, start talking about each individual’s needs and wants. There are many items that cover individual needs and desires, such as clothing costs, gym membership fees, individual purchases, and other items that can be spent in varying amounts.

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Each of these needs and desires can intersect with each other. For example, you may think your partner is spending too much money on clothes, while your partner sees you spending too much money on hobbies.

Realize that your needs and wants are different from each other and be prepared to compromise. You may want to establish a personal allowance for your needs without accountability to anyone else.

Listen to your partner to understand what is important to him or her. Each individual needs to have their own money to spend on their own interests.

As long as each individual can stick to the financial foundations of the family, there is no reason to argue or disagree about how the money is spent.

Should you combine your finances?

This is one of the questions that often arises when preparing a family financial budget, whether it is necessary to combine finances. This is personal preference. However, there are three main approaches.

1. Combine all finances

Almost all of each member’s money goes to a family finance place. All income and expenses are shared. Spouses may have small bills for their personal expenses, but most of the finances are shared equally.

2. Separate all finances

With the second approach, each individual has their own financial account. Rates are shared and assigned to each partner. Bills can be split based on a 50/50 approach or can be based on the size of each individual’s income.

3. Join the two

There are families who find this third approach more reasonable. Perhaps create a joint account for household expenses and other shared goals, such as saving money to buy a house or a vacation.

Each partner contributes to the joint account, but separates their own personal accounts. It should be emphasized, this can be a situation where everyone contributes the same amount or donates based on a percentage of their income. Or, there may be another way to determine how much money to hold in the joint account.

The most important thing is to discuss how to manage finances before going too far in preparing a family budget together. Make sure you and your partner have a fair approach and are both adequately protected in the event of a breakup.

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Setting up a budget meeting to track expenses

Each individual must take part in monitoring their own expenses. Meeting the family’s financial budget every week can be the solution. During this meeting, discuss the extent to which shared and individual goals are achieved. Find out in detail the expenses of each category and what remains.

At first you can do it every day, but if you get used to it you can do it once a week or even once a month. You and your partner may have many financial applications / software available to synchronize family finances.

There are many financial applications / software designed for the financial needs of the family. When you and your partner are used to sticking to a budget, these meetings can be shorter and more effective.

Remember that when it comes to finances, it’s important to stay calm. If a partner makes a mistake, he finds a solution and moves on. It is not wise to pick up mistakes and continue to be upset.

Some tips for preparing family finances well

  • If your partner refuses to combine finances, create a family budget to manage household expenses.
  • You can hire a professional to address the issues behind choosing not to combine finances.
  • If you are not married, prepare a family budget plan and wait to get married to put all the finances together. This will protect you financially in the event of a breakup.
  • The financial budget should include long-term financial goals. You and your partner should save regularly. Remember to try to save money for the year and put it in an emergency fund.
  • Make sure you plan time together as well. Cheap dating ideas can help you build a relationship with your partner on a tight budget.

The main thing is …

Don’t let putting together a family financial budget can cause undue stress in your relationship with your partner.

When you start exploring the possibility of combining finances and living together, it is best to build good habits from the start, which allow you to avoid disputes that arise later.

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How to Prepare a Family Financial Budget?  Here are The Tips

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