Family costs can skyrocket quickly. From mortgages, rent and car expenses to utilities, food and entertainment, checking accounts rapidly dwindle and credit card debt can climb.

Establishing a family budget helps keep costs in line and cultivates healthy money management skills for everyone. Plus, it can be fun!

Involve the Whole Family in Budgeting

One of the best ways to establish an effective family budget is to make sure everyone has a say. Encourage open, age-appropriate conversation about money, and don’t be afraid to pull young children into the discussion. Collectively crafting a family budget is an optimal way to teach even preschoolers the balance between incoming and outgoing funds. Older children will have an opportunity to learn how to allocate money toward bills, entertainment and total living costs to prepare them for independence.

Review Household Expenses

The first step of crafting a family budget is taking an inventory of all household expenses. Put young children in charge of listing categories on a poster board and older children and adults can do the same on a spreadsheet. Make sure to account for monthly bills (mortgage, rent, gas, electric, etc.), food, entertainment, transportation, travel and school costs.

This opportunity can also be used to see if there are any areas to reduce costs. Can the family save on groceries with better meal planning? Reduce weekly meal take outs? Lower gas costs by carpooling?

Close out the review session by selecting a date on the calendar in one month to review household expenses.

Set Realistic Financial Goals

Encourage the family budget to account for short- and long-term financial goals with small, achievable milestones. For example, if the inventory of household expenses revealed over-spending on takeout meals, start by reducing the frequency of three takeout meals to one.

Next monthly budget review, add another money-saving endeavor such as raising the monthly autopay for car or credit card payments.

Keep the Budget Flexible

It’s important for everyone to understand and appreciate the value of flexibility. Life can introduce unexpected expenses that come with emergencies, holidays and travel. This is why it’s beneficial to budget monthly, rather than only once a year.

Teamwork Makes the Budget Work

Working together not only helps to create family budgets, but it also ensures accountability. If everyone participates and unites as a team, the more chances of success in reaching family financial goals. If you’re looking for more guidance on family budgeting, our team has several budgeting tools from which to choose, including lesson plans for children.