When you’re in a tough financial situation, there are a lot of things you need to do. First and foremost, you need to sit down and create a family budget that everyone can agree on and everyone is able to follow. It’s the best way to slow down the outflow of money and set the base for getting back on track.
When making a family budget, here’s how to get started:
No. 1 – Clarify Your Goals: How will you know where you want to end up if you don’t have goals? Your goals can be to be free of debt, to acquire a certain amount of savings or having the ability to give a certain amount to charity every month. Mark them down and make sure everyone understands them.
No. 2 – Record All Purchases: And we mean ALL purchases. Don’t make exceptions for anything, even little ones like a pack of gum. Many times we have a habit of underestimating how much we spend, so knowing exactly how much you spend on a daily or weekly basis is very helpful.
No. 3 – Create Spending Categories: You’ve got obvious ones like rent/mortgage or loans, and then not-so-obvious ones will sort themselves out. Separate big ones like life insurance and make sure you include a category for Fun.
No. 4 – Hold Budgetary Meetings: Sit down with your spouse and have a friendly and open negotiation about family spending. Remember that this is about compromise and respecting one another. You’ll come away with a clear understanding of what you should be spending and saving.
No. 5 – Schedule Time For Budgeting: Determine how you and your family will work best and then start your budget accordingly. Make it user-friendly.
No. 6 – Check-In From Time To Time: Adapt your budget as your finances and situation changes, because it will.