Making financial budgets it a critical part of money management and financial welfare, because it helps you understand and fix your overall money situation. If you have a family that you provide for, and feel the money often vanishes into thin air during the course of a month, then it may be time to sit down and make a household budget, because it will help you understand the flow of money and offer opportunities to curb wastage. Another element of the budgeting process is to figure out who creates the budgets
Many people may choose to carry out the budgeting activity as a solo project for the sake of efficiency and privacy. After setting monthly saving goals and allocating funds for various categories, they may either choose to enforce the decisions throughout the month unilaterally or keep their family in the loop about the month’s budget. Yet another way to go about the task of implementing household budgets is to involve the family, if you have one. Instead of just keeping your spouse and/or children in the loop, you could go a step ahead and get them to participate in the budgeting process. The benefits of making and enforcing budgets with your family are significant, as we discuss below. Before we get started, let’s take a look at exactly the family members will be doing during the budgeting activity.
Budgeting with participation from your family
A regular budget typically covers certain income streams, saving goals, expense categories and the allocation within these categories. When you sit with your children, you may specifically cover any of the following areas of the household budget:
- Discussing and setting a common goal for the family, such as saving money for a bigger house or a vacation,
- Agreeing to save for a goal that applies to particular individuals in the family, such as an education fund for children,
- Budgeting the household income for various categories, such as groceries, entertainment, monthly allowances, etc.
- Coming up with ideas about how to cut spending in various budget categories, such as finding ways everyone can contribute to lowering the water bill or transport bill.
- Creating mini-budgets for the younger individuals within the family where children can determine how to save and spend their allowances.
It may take some time for your spouse and kids to adjust to the new group activity but an open talk about money matters but it may well be worth the effort. Now that we have determined the different ways family members can take part in the budgeting process, we will look at the benefits of making the household budgeting activity a family project.
1. Your family can pitch more / better budgeting ideas
If you sit with your family on a monthly basis and discuss the different ways you must all try to save money, you may all come up with more ideas to curb your spending. They say two minds are better than one and it helps in the budgeting process because your spouse and kids may approach the problem from different perspectives that never occurred to you. For instance, if your grocery budget needs to be reduced, you spouse or children may suggest a few different low-cost and tasty recipes to try out for the week. Or if your utility bill needs to be reduced, your kids may suggest you adopt a new energy saving gadget they learned about at school. The possibilities are endless.
2. Your family can bond over the budgeting activity
If you choose to make the household budget with the help of your spouse/kids, the process can become a fun family activity that everyone can look forward to on a monthly basis. When the family comes together to share ideas about saving money, it teaches them the importance of team building and compromising personal wants for the welfare of the collective family unit. This kind of flexibility and selflessness is a great personality trait that will help them mature into well grounded and resilient adults.
The same effect is achieved when parents share their financial concerns with their children, even if they are not involved in the budgeting process. Children appreciate that they are part of a familial unit and are kept in the loop about big decisions. Of course, the age of your children determines what level of informational clearance they have so reveal only those details that seem relevant to you.
3. You family will develop a sense of ownership over the household budget
One of the many ways to lower your household expenses is to change the lifestyle followed by your family, such as:
- Going out to eat less or fewer trips to the cinema,
- A lower monthly allowance,
- Cutting the cable.
Humans are creatures of habit and any changes that need to be made at home by your spouse or children may be met with resistance. In other words, they may or may not be open to such changes.
However, if your family participates in the budgeting process to make decisions about where and how to save money, it will be easier for them to accept lifestyle changes required by the budget. This is one the best ways to get your family on board with the budget targets because it builds a sense of ownership towards the budget and the mandated lifestyle changes. Collaborating with your family as a team, instead of following a dictatorial approach when announcing changes in their routines, will lead to less aversion. The type of communication that takes place during the family-supported budgeting process is the key to acceptance, because everyone will understand why the changes are necessary for the welfare of the entire family. Once they accept and understand that certain sacrifices have to be made, they will find it easier, (or less difficult) to enact these changes.
4. Budgeting with your family teaches vital financial skills to your children
One of the greatest benefits of approaching money management as a family project is that it encourages your children to develop good money habits that will help them grow into financially responsible individuals. This is the finest kind of financial literacy that parents can partake well before children begin to learn about personal finance at school. When parents lead by example and involve children in the budgeting activity, children quickly learn about the importance of living frugally to increase saving, working harder to multiply their incomes and the importance of investing. In short, you will be contributing to the financial awareness and maturity of your children as you involve them in the handling of the household’s money matters.
Choosing the right level of involvement
Now that you know that various benefits of budgeting with your kids, you can decide if it’s the right decision for you. All this depends on whether your children are mature enough to handle certain financial details, or whether you should simplify the concepts of money for them. For instance, your 8-year old child would understand less compared to your teenager, so you may have to customize the kind of financial information you share with them. Moreover, each family has a different culture and ultimately you have to determine for yourself the level of participation that is optimal in your case.