October 24, 2011

Starting a Family on a Budget


Parents and heads of households can initiate a family budget for any number of reasons, and methods used to enforce the spending restrictions can vary according to household structures. But if possible, engage all members of the family who can comprehend the concept to assist in the process, reinforcing both the idea and the reality of financial management as well as encouraging full compliance and voluntary reductions.

Basics of Any Budget Plan

Budgeting your family’s money and watching not only how much is spent but how, when and on what items are aspects of sound financial management. Not all families have formal budgets, however, and the transition into a restricted access environment can be difficult.

Be sure to list realistic family income and expenses. Note maximum amounts allowed in fluctuating expenses like food and utility bills.

Enforcing the New Budget

One suggestion to both reinforce the necessity and make the savings a reality is to have the offspring who resist complying responsible for keeping track of the savings the monthly budget has incorporated. Basic balancing of the books, so to speak, brings the idea into a black-and-white, concrete physicality, and with the proof of necessity and savings right there, your child or children learn not only the value of money but how important it can be to not spend frivolously or indiscriminately.

Have monthly family budget meetings. Announce progress and total savings. Discuss areas that continue to generate high expenses. Involve everyone in ways to reduce those expenses.

Goal Rewards

An excellent incentive to watch expenses, increase family income and save whenever possible is, as a family, vote on what the family will do with the saved amount. Whether it’s saved toward a new family car, a vacation or a needed home improvement, solicit suggestions from everyone; prioritize the list and vote on the top contenders.

Most importantly, follow through on the reward when the goal has been exceeded—not met. Keep a financial cushion in reserve as “seed” money toward the next goal or for emergencies that may pop up at the last minute.

Expense Reduction Possibilities

As your family discusses and reviews known expenses, look beyond face value:

A. Do you have more than one service from a provider or vendor? If so, can you get a combined-account discount? If not, can you find less expensive alternatives?

B. Do you have overlapping or duplicate service? For example, if your family has a group cell phone plan, do you truly need the land line expense, too?

Also, look into phone arrangements that help you save. For example, getting prepaid phones like prepaid T-Mobile phones for your whole family on a monthly payment you can control, may turn out to be a more affordable option.

C. Transportation costs include not only fuel but insurance, maintenance and vehicle depreciation costs. Is car-pooling an option? What about public transportation to and from work or school? Many public transit systems have student discounts on passes, which further reduce costs of alternate transportation. For an average monthly transit pass of $50 for adults and $20 for children and college attendees, a family of four can spend more on gasoline in two or three cars than the total cost of public transportation.

Older children might ride bikes instead of the public option, which can add additional savings if safely and realistically possible.

This article is by Holly Miller @ Coupon Croc, where families go to save on all of their expenses, including their TV service packages with a Virgin Media discount code.

Creative Commons License photo credit: Ken Wilcox.

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Alexis Rodrigo