Okay, so let’s not pull any punches here… household budgeting sucks.
You know it sucks, I know it sucks.
But what if I told you household budgeting didn’t have to suck?
Okay, I’ll rephrase that.
What if I told you household budgeting didn’t have to suck…. as much?
The reason the thought of family budgeting has even weaseled its way into your head is because you’re either racking up credit card debt or you want to stash some cash away for the ‘future’ – or both.
You’re stressed out about money, or you feel like you’re going nowhere with your savings.
There may even be a few of you over-achievers out there doing okay at budgeting household expenses, but you want to be doing better.
Whatever your reason, you want a home budget that can be setup as painlessly as possible, check up on it once in a while, and get on with your life. Am I right?
When you unenthusiatically wonder how to make a household budget, your mind probably trudges over to the seemingly arduous task of adding up all of your household expenses.
This is where the world has told you to begin, because this is how a typical household budget works.
Well, I say that you forget about all that boring crap.
Here’s what you should really do….
This is how to plan a household budget.
Household Budgeting Step #1
Peruse through each transaction.
Sort the statements into chronological order.
Make them into a nice neat pile.
Remove any cups and dishes from the kitchen sink.
Place your pile of neatly ordered statements into the sink.
Light a match.
Immediately drop that lit match into the middle of your sink.
Bask in the light of your former spending going up in flames.
Watch that sh*t burn.
Warning: be aware of curtains, mother-in-laws, and other flammable items nearby.
This cleansing process will help you spiritually and metaphorically eradicate any spending habits you once had.
The old you is now gone.
Stroll to the closest mirror and smile at the new you.
Fly pretty bird, fly.
Household Budgeting Step #2
The household budgeting mindset has nothing to do with what you spend on a daily basis.
The household budgeting mindset has everything to do with spending in a way that will put a GREAT BIG SMILE on your face – whether it be today, tomorrow, in a month, in a year, or in 10 years.
These are your Dreams.
Write down all of the dreams you and your family want to achieve over the next 10 years, including when you want to do it and how much you think it might cost.
These are called Goals.
This is call your Savings Amount.
Then ask yourself: Am I willing to reorganise my ‘everyday expenses’, so that I can put aside my Savings Amount each week?
If the answer is yes, then you are an absolute legend and I love you!
If the answer is no…. don’t worry.
I still love you.
But, if you’re looking for something more practical than my love, here’s what you do.
You have 3 options.
1. Earn more – this will give you more money to put towards your goals.
2. Give your goal date a nudge – pushing the achievement date of your goal back a bit will give you more time to save, which means the amount you need to save towards it each week is less.
3. Dial your goal amount down a tad – by reducing the amount of money it costs to achieve a goal, you will need to save less, which means the amount you need to put away each week is lower.
This is how to manage a home budget. It’s all about a bit of give and take, based on family priorities at the time.
Household Budgeting Step #3
This part is my favourite.
Now that you’ve figured out your goals, when you want to achieve them and how much you will need to save each week, here’s what you do:
You need to setup an automatic transfer from your main bank account to a savings account, so that EVERY SINGLE WEEK the required amount is immediately siphoned off to put towards your goals, as soon as your income hits your account.
By making this an automatic process as soon as your wage hits your account, you will quickly learn to live without that amount and will soon be reaping the rewards of saving for your goals.
When it’s automated like this, there’s also a much better chance your greedy little fingers will stay away from it.
Another thing I like to do which seems to work is to setup a ‘weekly allowance’ for my wife and I (you might have allowances for the kids too). Again, this should be automated, whereby on the same day of every week $X is transferred to a goal account, $X is transferred to ‘allowances’ account and the remaining $X can be used to cover everyday expenses and loan repayments.
Allowances let each of you to spend a certain amount each week on whatever tickles your fancy without the other partner caring. By making the allowances equal and equitable, you can also eliminate squabbles over money and there’ll be no more arguments about who’s spending more from the joint bank account.
Never underestimate the importance of systemising and automating your flow of funds in this manner.
That’s all folks…. It really is that simple. This family budget process will allow you to setup a simple household budget that you can run like a pro, year after year.
So, see if you can implement these steps into your family budget for a month.
Just work hard at sticking to it for one month.
By using these household budgeting guidelines to build your own custom family budget, I can guarantee you will be smashing out your family goals in no time.
You don’t need any fancy apps or try to find the best home budgeting software. Face it; you don’t want to be trying to record every dollar you spend, do you?
Every single day?
Every single day for the rest of your life?
Didn’t think so.
Keep life simple.
Author: Chris Strano
After playing a vital role in the creation of his two sons, Chris Strano gave up his former-life as a financial adviser to dedicate his time to providing everyday families with basic money management advice. Drawing on his years of education and experience, he has also developed an affordable 100% digital course showing young families how to build their own custom household budget and savings plan to work towards their goals, using financial planning strategies (without the cost of a financial adviser). You too can get started by grabbing his free 6-Step Budget Cheat Sheet at Build A Family Budget and follow him on Facebook and Instagram @SmartFamilyBudget.