How the Right Family Budgeting Tool Can Help You Stay on Track
Creating a budget as a family is an important part of maintaining your continued financial health. Not only does budgeting together help ensure everyone's buy-in, but it also helps improve the whole family's money management skills.
Still, the logistics of creating such a spending plan can be a little complex unless you have the right family budgeting tools. Here's what you need to know about making sure your household budget works for everyone involved.
Choose your family budgeting tool
You may want to start by deciding whether you'll be tracking income and expenses using paper and pencil, or with an app or computer program. Paper tracking has a low barrier to entry and is something that nearly everyone can do, including small children. However, with this method, it can be easy to forget to update your tracking sheets. If you go digital, the best family budgeting apps will remind you to track or automatically update your financial information when it clears the bank.
To make this choice, hold a family meeting and discuss your options. Weigh the pros and cons of various tools. Make note of the apps and programs that will allow everyone to take part in tracking and budgeting so they can work with you.
However, if you primarily use cash for expenses and allowances, an app may not be the easiest tool to integrate into your family budget. Whether your budget will be spearheaded by one member of the family or a joint effort, the right tool will make it simple for you to track and categorize everyone's spending.
Look at previous months' income and spending
While putting a tracking system in place will help you keep an eye on your future expenditures, you'll also want to go back over previous months' income and spending to set a baseline for how to budget. Gather together your pay stubs or any other income paperwork from the last few months to determine how much income you typically receive each month. This number is the maximum amount you can spend on your monthly budget.
From there, add up how much you've been spending per month, using your bank or credit card statements, as well as receipts for any cash spending. Even if this number is greater than your income, there's no need to panic. Now you know, and you can start making changes to bring your expenditures down.
A good way to do this is to separate your expenditures into fixed and variable expenses. The fixed expenses include rent or mortgage, car payments, daycare, utilities and the like, which remain the same from month to month. The variable expenses are the ones that can change, such as groceries, dining out, entertainment and clothing. If you've been spending more than you bring in, the variable expenses are where you can start looking at ways to cut back.
Now that you know your income and fixed expenses, putting your tracking or budgeting tool in place can be part of a family effort. The best family budgeting apps offer ways to integrate everyone's total income and fixed expenses into the platform as a starting point. But even if you're using a paper ledger, you can reference these initial numbers at the start of each new month.
Budgeting is a process
Once you've set up the family budgeting tool you plan to use, keep having regular meetings about the budget with the whole family. This will give you a regular deadline to make sure your tracking is up to date and provides your family with consistent opportunities to discuss what's working and what needs to be adjusted.
It can be easy to set up a family budget and never revisit it, but budgeting isn't a single event. It's a process that you must continue working on together and it requires financial discipline from all involved. Finding the right family budgeting tool is the first step, but committing to the process and getting buy-in from all family members can help you succeed with your budget over time.
A few financial insights for your life
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.