Every household should spend some time going through their financial momentum. The best way to do that is to create a couple financial reports that you will be constantly updating on a monthly or annual basis. These financial reports comprise of a family budget and a balance sheet.
Why is Family Budgeting Important?
Having a fixed plan on how to regulate your finances will help your family save money and avoid bad debts. This eliminates financial related stress.
A family budget gives your family the ability to handle unforeseen or unexpected expenses.
Having a financial plan enables the family to save for future emergencies or for your long term goals as well as retirement.
Family budgeting eliminates the problem of accidental overspending. This helps the household to spend on things that are essential.
Are there Any Types of Family Budgets?
- Deficit Budget
This refers to when the level of expenses surpass the income. This should be avoided by all means.
- Surplus Budget
This is whereby the income exceeds the total expenses. The family has the ability to save money for future use.
- Balanced Budget
This budget type is considered good. The income and expense levels are equal. The expected expenditure meets the expected income.
How to Deal with Family Budgeting When your Goals Keep Changing
There comes a time where some of your family goals keep changing in addition to your income and circumstances. Some goals may not change, and others will fluctuate. Through all these different life phases, you will still need to keep a keen eye on your income and expenses so that you can avoid financial burdens. Let us take a look at some of these life phases:
Young Family Without Children
A young couple has extensive budgeting options. Your income may be at the lower side and it may be very tempting to spend all your money as soon as you get it. You should learn to live within your means. Communicate as a couple and find out what your long term family goals are. Planning to buy a home, having a small/big family and retirement goals are all areas that you should talk about. Family budgeting will enable you to save for the long-term goals.
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Young Family With Young Children
A shift in priorities is normally caused by adding a child to the family. You can find other financial options for baby clothes and baby care items that will help you save a lot of money. Always keep in mind that as your child becomes older, so will the expenses increase. Now is the right time to begin saving for the child’s future while still focusing on your own. You will also need a sufficient budget for childcare overheads as well as medical expenses.
Family With Older Children
Most young parents make the mistake of neglecting their finances and fixating on only raising the children. It is not bad to adjust your budget and begin saving for college for your child’s future. If you have been saving for a long time then you should have good retirement and education funds at this point.
Older Couple Without Children
If you are already in your retirement years, your main budget priority will be to continue living within your means. Even though some people find it distasteful to talk about end of life’ care, it is a very serious issue to consider. This includes senior care facilities, nursing homes, assisted living, and funeral costs. This may be the right time to consult a financial advisor and planner in order to ease your mind about all these expenses.
The main aim of having a family budget is to choose how the family income is used. Always seek financial advice from your lawyer, financial planner and advisor. Share this article on Facebook and Twitter and enable a family to learn about their family budgeting options. Remember, family budgeting helps families avoid financial burdens and bankruptcy.
- Thomas Nelson
- Dave Ramsey
- Publisher: Thomas Nelson
- Larry Burkett
- Publisher: Moody Publishers
- Edition no. 0 (04/01/2002)
- Used Book in Good Condition
- Larry Burkett
- Publisher: Moody Pub
Last update on 2020-03-19 / Affiliate links / Images from Amazon Product Advertising API
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