Why Having a Family Budget is Important (3 Minute Debt Break)

2022-07-15

Lifestyle Debt

Every family is different. But usually the one constant in every family is that they’re busy! Between work, school, extra-curricular activities, making sure everyone is fed and clothed and still trying find the time to sleep… the family budget can get neglected. Without a plan to get or stay out of debt, many households may inadvertently be setting themselves up for failure.  The good news is that budgeting doesn't have to be complicated. By following a few simple steps, any family can get themselves on the road to financial well-being. 

Family with children playing board games and having a good time together

The first and most important step of any budget is to understand what matters most for your family. It's important is that everyone is clear on what your priorities are and their order of importance. That way everyone is working toward the same shared goal and are mutually contributing to your family's long-term financial success.

The next step is to figure out how much money is coming in each month. This includes all employment income, government subsidies, investment income and any other money that can be consistently relied upon to support your family. Whatever this amounts to will be the upper limit of what you can afford to spend, so it is important to know it intimately and immediately off-hand.

Just like you want to know just how much money is coming in each month, you'll also want to know exactly how much money is flowing back out. For your budget to work properly, this number needs to be the lower of the two.

Begin by documenting your fixed expenses — such as rent or mortgage, property taxes, car payments, cable and internet, mobile plans and insurance; all the costs that stay consistent from month to month. Next, estimate your variable monthly expenses by calculating the average of what you've spent on each over the past six months. Finally, decide how much you would like to set aside for savings. Be sure to include birthday and holiday gifts in your savings plans to avoid being caught off guard when they come up.

The tricky part is then tracking and maintaining. You know how much money you're able to spend each month and you're aware of how much money you need to spend each month. Now you must do the hard work of staying within that limit — which is usually easier said than done.

If you and your family are struggling to balance your budget due to overwhelming debt, a Licensed Insolvency Trustee can help. During a Free Confidential Consultation, you will review your financial situation and all your options to determine which Life Changing Debt Solution might best fit your unique needs. 

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