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How to Set Up A Family Budget

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Tips For Setting Up a Family Budget

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Are you interested in knowing how to set up a family budget? Almost everyone suffers from money worries at some point; it is the cause of many family disputes for one reason or another. In fact, one of the tops reasons couples get a divorce is over one or both parties' spending habits. But there is a better way.

If you can set up a family budget, you can cut costs on things you don't need and maximize how far your income goes. Let's take a look at some ways to get more out of family budgeting. By having a plan you will put yourself in a better long term financial position.

Create a Budget

There are many options to start and track a family budget. You could use a piece of paper, a spreadsheet, or an app. Whichever method you choose should make it easy for everybody to follow.

Next, you need to work out your income and outgoings. Bring together bank statements and bills so that you have all the figures available to you. This will allow you to see how much you have available and budget accordingly.

Goal Setting

As a family, you need to discuss what your priorities are beyond the essential bills that need to be paid each month. Your kids may want to start new activities, but if there isn't the money to pay for it, they will have to lower their expectations. Have them select just one and set a goal to find enough money to pay for it.

Other goals to do with college funds and retirement, are longer-term and can often get neglected when you have bills to pay. If you have a better understanding of your finances you will find it easier to make room for these types of goals.

Paying Less Tax

We would all like to pay less to the IRS, but it is impossible, right? Well, you might be paying more in tax than you need to. You may be filing under the wrong status or be able to claim more for dependents. Maybe you bought a home and didn't know the tax deductions when buying a house?

There could be childcare expenses that could be claimed for or tax credits available. It isn't going to be a fun thing to do, but studying the current taxation rules could reduce the tax you pay to the IRS.

Unfortunately, it is very common to miss out on allowed tax deductions.

Reduce Your Debts

You will struggle to hit your financial goals if you have a mountain of debt to pay each month. Paying this down should be a priority to minimize the interest you pay.

Having a handle on the money coming and going through your accounts will allow you to understand better how to reduce your debts. If you can stop using credit cards, so that you aren't adding to your debt, so much the better. Try and find balance transfer deals, so that you can pay less interest on credit card debts.

If buying a new home is something that has been talked about as a financial goal, you may want to consider using a site like Credit Karma that can help you manage your finances better. Not only will you be able to get free credit reports and your score, but they will also provide you with assistance on ways to increase your financial standing. Credit Karma is a great tool to enhance the planning of your family budget.

Budgeting for Problems

If you are able to put some money aside to deal with unexpected emergencies, this is an excellent idea. A life insurance plan is a precaution that will prevent your family from falling into financial ruin should the worst happen. Setting aside money for an "emergency fund" is always a wise idea as well.

Trust me, the worst happens when you least expect it. The best budgeting plan allows for unexpected downfalls in life.

Food Shopping

Planning your grocery shopping better can lead to savings. If you know what you need to feed the family for the week, you won't overspend on items you don't need. This can cut down on food waste, which is an unnecessary cost.

Take advantage of sale items that you use and stock up. Try cheaper brands of items you usually buy. You may find that they are just as good as the brand you have been buying for years.

Keep a lookout for special offers from restaurants as well. If you can find a free meal deal or other special offers, this could make for good savings and give your family a change.

Budgeting For Vacations

You may not imagine that it is possible to budget for a family break. You could make it a financial goal and look out for offers that could stretch your budget to give the family a great vacation. If this isn't possible, consider a staycation, with days out and other activities you wouldn't normally do.

Keeping Track

Make sure to check your budget regularly throughout the month. This will help you stay on your budget and spot any issues before they become problems. If you are spending more than planned, you know that you will have to try to cut some corners to get back on track.

Talk About It

It can be very difficult to discuss money issues. But if you can keep open conversations with the whole family, everyone will understand the situation and you will be able to work together to solve it. This should reduce the chances of arguments over spending and teach your kids how to deal with money in a better way.

Final Thoughts on Family Budgeting

Budgeting for family expenses doesn't have to be difficult. It is a matter of getting everyone involved and then sticking to your plan. Keep an open dialog with all of your family members and always make sure you are on the same page with your spouse. Teaching the kids about finances at an early age will help them immensely down the road when it really matters.

This post comes from the TODAY Parenting Team community, where all members are welcome to post and discuss parenting solutions. Learn more and join us! Because we're all in this together.