It may seem impossible to make everyone happy, but you will be surprised how much happier your family is once you make a good family budget plan and learn to stick with it. For most people, money is one of their biggest stressors, if not the biggest thing they get stressed out about. The right budget, too, will take everyone's needs into account, so everyone will feel better about working together to be more financially responsible and stable.

Your Guide To a Family Budget Plan

Making a family budget plan is the hardest part because you will have to be really conscious of how you spend money. For some people, it can be difficult to be honest when thinking of how much money is spent on unnecessary items, like expensive coffees or trips to the movie theater. That is why it is so important to start the process with no sense of judgment, as everyone is only working together to help the family as a whole. And if you are worried about making a budget on a low income, don't worry! You can do it too!

What Is a Budget?

First, you need to answer the basic question: what is a budget? Once you know what falls within the definition, it will be easier to keep ideas straight in your mind as to what will affect a budget or not.

You should also consider the pros and cons of having a budget, and whether it will provide more benefits than problems. Is it worth the time and effort to create and follow a budget?

Benefits of Living on a Budget

• When you are living on a family budget plan, you always know where your money goes. You won't be that person who tries to buy groceries and gets stopped when your debit card isn't accepted because you ran out of money before you thought you would. That has probably happened to everyone at some point, but it's embarrassing and it can keep you from getting essentials you need to live, such as food for your children.

• Most of us who have gone through that spend hours trying to think of where the money went, going through receipts and the check register, before finally finding the answer in an "Aha!" moment.

• You will quickly find that once you start being conscious of how you spend, you almost immediately start saving money. Even if you aren't yet making concrete plans for a retirement fund or a special savings account, you will be spending less money than you were before.

• One way you will save money is by paying on time, and saving yourself any of those pesky late fees. You will also save money on credit card interest when you start paying those down.

Downsides of Living on a Family Budget Plan 

• Most of us spend enough time waiting throughout the day that we don't have another area in our lives where we want to learn to practice our patience. Unfortunately, that is exactly what you have to do when you are new to budgeting. You will find that you have forgotten some items, misestimated other items, and have more surprises than expected.

• That's okay because it's part of the process when you start living on a budget. When you go in with the expectation that it may take some time to get it right, you can be more patient with yourself.

• You need to have a strong will to consistently follow a family budget plan. Especially when you are tired, you might find yourself wanting to give in and get something you're not supposed to. How many times have you had the ingredients you bought to make a nutritious meal but instead ordered a pizza? If there are areas where you know you are weak, go ahead and try to find ways to change your habits.

• If there is a break room with junk food, take your breaks somewhere else. Prepare your dinners as much as possible at the beginning of the week so you won't feel as tempted to give in to temptation when you are tired at the end of a long workday.

What Kind of Budget Is Best for Your Family?

There are several kinds of budgets, and one isn't really better than another. You will find, though, that some will be better for your family to use and put into action. Every good family budget plan will make sure all the bills are paid, on time, and that you are living within your means. You will feel like you are in charge and that your financial health is within your reach and under your control. Beyond that, though, there are several possible differences. Here are the three main types of budgets you can choose from:

The Planning Budget

Sometimes people decide they need a family budget plan because they want to save up for something specific, like a trip, a wedding, or a new car. If you only plan to go by your budget until you have achieved your goal, that is all right, but you may find that you like being in control of your finances. The habits you learn even for a short term budget will help you later when you are trying to manage your money. Here are the steps to start living on a planning budget:

The Problem Solving Budget

The problem solving family budget plan is also exactly what it sounds like. You may have a problem, such as buying too much fast food or make-up, and you decide to address the problem and deal with it head-on. Instead of making a detailed plan, all you have to do with the problem solving budget is to identify the area where you want to cut down on your spending and then stop spending in that area.

You may want to change other habits when you adopt a problem solving budget; for instance, if you are trying to cut down on fast food and you drive past your favorite fast food place every day, change your route so you don't have to see it every day.

The Comprehensive Budget

With the comprehensive family budget plan, you have to put in a lot more work and do a lot more planning. You will also need more self-discipline, but you will be happy to see that it also yields the greatest results. Once you are successfully using a comprehensive budget, you can get a boost in self-esteem as you realize all that you are doing and how hard you are working to manage your finances.

The comprehensive budget works to cut down spending in almost every area, and you will change it as you learn more about your spending habits and needs. It takes time and experience to learn how to identify all of your spending habits, and practicing good financial habits is a life-long endeavor. 

Tips For Setting Up a Family Budget Plan

Here are some tips to keep in mind when setting up your family budget plan:

How To Get Started Making Your First Family Budget Plan

One reason budgeting is hard is because it's so time-consuming. Luckily, you won't have to spend as much time on budgeting later as you do at the beginning. The task seems overwhelming when you consider all the work you will have to do to get started, and you may want to give up before you even start. So think first about why you are doing this.

When you have a personal household budget, you are in control of your finances and you can make choices. You are also far less likely to go into debt, and if you do go into debt, you are more likely to be able to budget your way out. Debt is just another form of bondage, and living within a budget gives you freedom from that bondage. Most American families have a massive amount of debt, and they don't even know how to get out of it.

Here are the steps to take when you are starting a comprehensive family budget plan:

Gather All Your Financial Information Together

First, take care of the income portion, because that will probably be easier. Most people can count on their paychecks to be the same week after week, so it is a simple matter to figure out your income. Also add in any child support, alimony, side jobs, and other sources of income you can count on. Some people might think to use their tax returns, but figuring out your monthly income is more important because that is how your bills generally come in too.

Then Gather All Your Expenses

• Mortgage or rent statement

• Auto payment

• Credit cards/store cards

• Utilities -- Electricity, gas, trash, sewer, water

• Internet services/Cable TV/Subscription services (Hulu, Amazon Prime, HBO)

• Food, including any normal eating out

• Gasoline/Bus fare

• Clothing/school uniforms

• Other school supplies

• Household expenses, such as cleaning supplies

• Pet supplies/pet food/pet care

• Regular repairs and maintenance

• Medical bills/dentist/eye doctor/glasses and/or contacts

• Online subscriptions

• Child support/Alimony/Allowance you pay to someone else

• Gifts for birthdays/Christmas/weddings/baby showers

• Personal installment loans

• Taxes, if you pay them yourself because you are self-employed

• Tithes/Charity contributions

You may have other regular expenses, and there may be things you forget at first. You will get the hang of it and start catching the items you miss, so do the best job you can and don't worry if you forget something.

Organize All Your Information

You can do this any way that works for you. The goal is to separate all your expenditures into groups as to what kind of expense they are. You can use an old-fashioned ledger, notepaper, or an online spreadsheet. Once you have the information organized, you will be able to look at it and immediately get a clear idea of how much you pay for different expenses.

Prioritize All Your Expenditures

There are some expenses you pay for every month without thinking about it, but that you could easily live without. You may be someone who still subscribes to cable TV but you actually stopped watching it years ago when you started watching shows through subscription services instead. Even some entertainment options may seem important if you are a big fan, but they are less important when compared to non-negotiable expenses like your mortgage or your car payment.

For instance, your HBO subscription isn't as important as paying your electric bill, so if you had a choice of one or the other, you would definitely choose to pay your electric bill. You don't have to cut anything out at this stage, but be honest about how important these items are.

Compare Your Expenses to Your Income

If this sounds scary to you, you're not alone. One nice thing about making this family budget plan is that you will be looking at information like this, though, and learning to not feel overwhelmed. It is possible your income is less than your expenses, and if so, this is something you need to deal with as soon as possible.

If you take a good, honest look at your situation and realize you aren't earning enough to make ends meet, that is good news! Now you know exactly what the problem is and you can work on fixing it. It's not uncommon at all to live outside your means, but you are starting a process that will help you change that.

1. Income and Expenses Are Equal

If you compare your expenses and find out your income is about equal to your expenses, that is great news! You are literally living paycheck to paycheck. Now that you know your income and expenses are equal, you can look through and find any places where you can make changes. While you can survive in a holding pattern for a long time, one minor crisis, such as a car crash, could bring all that tumbling down. But you are now in a position to make a budget so you can find ways to start saving money.

2. Income Is Higher than Expenses

If your income is at least 10% more than your expenses, that's amazing! Go ahead and think of ways to spend that extra money that will help you build financial security. Saving is great, and most people put off saving for too long. If you have a high interest credit card you make monthly payments on, go ahead and pay it down to save some of those fees. Even though you are living within your means, go ahead and look for places where you spend more than you need to so that you can get an even bigger cushion. 

You can follow a step by step guide on setting up a family budget plan to make it easier when you plan your first budget. Make all your decisions first about how you want to organize and plan your budget before you actually start on the hard work. Will you use a ledger or an online spreadsheet? Do you want to keep your receipts and bills in a folder or envelope to keep track of them?

Do you want to build in realistic rewards for your family when they do well, such as a day out at the park or a pizza and movie night? Planning will make the entire process easier, it will make it easier to track your money, and it will give you a sense of accomplishment when you follow your plan.

How to Cut Down on Expenses

In the beginning, you found some areas where you could cut down expenses in your new budget plan. This is something you can keep in mind continually, as you pay your bills every month and consider how much you pay for everything. Here are some extra tips on how to cut down expenses:

Conclusion

If your family is ready to take the plunge and start making your own family budget plan, then there are many budget tools that can assist your family in making a simple budget. Follow our budgeting tips above, and your family will finally be ready to start achieving your family budget goals.