The family budget can frequently be a source of conflict and dissatisfaction among family members. Most often a family’s financial decisions are undertaken by the person earning most of a family’s income, whose decisions are not always acceptable to other family members.
Understanding that money is such an intrinsic part of family life, it is important for families to achieve compromise on this subject. Here is a four-step outline for budgeting the family money that might help to maintain peace and harmony.
1. Set your priorities.
Priorities are different from goals. They are aspects in your family’s life that you, as a family, want to focus on – like health or a future for your children – while goals are specific targets that support priorities.
In setting priorities, do not set too many, as it defeats the purpose. Ideally there should only be one, but because life is not ideal, 2 to 3 are reasonable.
As the priorities are set and agreed upon, write them down. Post the paper where everybody can see them to remind them of what your family is focused on for the next few years.
2. Write down your goals.
Once the family has set and agreed on priorities, the next step is to set the family goals. Goals are specific and measurable conditions that, when achieved, will support the priorities.
In setting goals, establish a target that is both challenging yet achievable. A 10-15% of the family’s income is a good savings target for a child’s future education: stretching yet reachable.
Try to limit your family into setting 1-2 goals per priority, to maintain focus.
3. Work towards your goals.
After setting your priorities and goals, start living by them. All of the family’s activities must be geared towards working at your goals. Track progress, particularly on financial goals, by using an income and expense-tracking tool. The simplest way is to get a notebook and list down all expenses & incomes, and set a budget for future spending.
There are those that invest in computer software or a family accountant. Whatever it is, the important thing is to have a system of monitoring the family’s performance towards achieving set goals.
4. Evaluate your family life.
At a certain point during these exercises, when you feel like it’s time to evaluate your life, check how your family is doing in relation to the goals. Goals that have been achieved can be checked off the list, and new ones can be formulated.
At times, in major changes like a career move, or when a family member goes away, it might be a good time to re-evaluate priorities. When such a time comes, it is reasonable to assume that a new cycle begins; just like the overall reason we all try to get the most out of our available resources. That’s life!