Ways & How

How to Plan a Family Budget

How to Plan a Family Budget

In this time of recession and high cost of living, it is not only wise to plan a family budget but it is also imperative for the family’s survival. There is always a time to harvest and a time to spend earnings. How a family manages its resources will affect its future undertakings.  We know how hard times can be and so we all should want to know how to plan a family budget. Keeping a family budget allows us to keep track of our expenses and helps us manage our spending. It limits our expenses and enables us to re-think what we are doing with our finances. It develops discipline and prepares us better to meet future needs and avoid financial bankruptcy. Here are a few tips:

  1. Start by checking your cash flow. Your expenses must not be greater than your income. Find a financial management plan that will work for you. Seek help by reading or attending financial management training seminars. Know how you can maximize your resources and minimize expenses. Plan a budget that is doable for you. Stick to your plan. Be in control.

  2. Make a list of your priorities like house bills, transportation, children’s education and other necessities.

    sed on your expected gross income, decide how much should be spent for each identified need. Be sure to save 20-10% of your earnings. If you practice tithing every ten percent of your income, you should include this in the list of priorities and it should not be treated as part of savings. Do not consider temporary income when you plan out your budget.

  3. Prioritize fix expenses. Pay your loans promptly to avoid penalties. Set aside the money that should be spent for necessities. List down all expected fixed expenses and the expected cash flow. Work on your available budget.

  4. Try to cut down on other expenses. Look at your list and try to reduce, if not eliminate, other flexible expenses like clothing, food and gifts. For example, you might want to take the train or bus instead of taking your car to work to save gas. The family might consider eating out less or not eating out at all in a week. Avoid throwing food away. Recycle materials at home. Turn off lights or power when not in use. The little savings you get out of these can be a lot in a year’s time. Cut down or eliminate unnecessary loan or credit debt.

  5. Set short-term and long term goals. List down everything you need to pay up in a month’s time and those that you need to pay up in a year or more.  Include those items that the family needs to spend for like repairs and maintenance. Make a rough estimate of the cost and the duration of time you need to be able to raise the amount needed. Set a schedule for major purchases to avoid buying things on impulse. Take it easy on your credit card. Track your expenses. Keep a record of what you have spent.

  6. Strive to be debt free. Seek financial freedom. Be able to differentiate a felt need from a real need to avoid incurring loans and buying things beyond your means. Increase your savings and investment. Multiply your earning potential by involving the whole family. Since you are working on a doable and fulfilling budget plan for the family, it is important to involve them in the decision-making as well as in following the budget plan.

If you keep these simple guidelines and the principles behind you, you’ll be able to know how to plan a family budget that will work in your unique context.


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