Having objectives for your family budget is integral to the success of your budget.
In fact, objectives are important in most things we do – family budgeting just being one of them.
Wow… that sounds so boring.
Let’s re-word that.
What is the purpose of a budget?
Well, put simply, if you want to do a lot of fun sh*t in your life, you need some sort of a household budget.
Not one of those boring budgets where you skimp of everything to save a dollar here and two dollars there.
I’m talking about a badass budget that’s going to see you jet-setting overseas with the clan, buying a pimpin’ new set of wheels, eliminating your home mortgage in less than 10 years, and rocking out at concerts every month like you’re 17 again.
Sounds a bit far-fetched, doesn’t it?
Well, I can assure you it’s not. It all comes down to you taking some vital action.
And it all starts with one simple task – the most important task of all.
I want to labour on this for a moment, because most people tend to rush through this process when budgeting. For some reason, people spend waaaayyyy too much time crunching numbers instead of focusing on objectives.
So, the very first thing you should do is this:
Grab a glass of wine, beer, lemon lime & bitters – whatever gets you going – take it out to the front porch or back patio and pull up a stool. Got a partner? Grab them by the scruff of the neck and tell them there’s a new sheriff in town. The old way of managing the family finances in your house left on the last train to Omaha.
This is your town now.
Okay, so you’re sitting out on your deck with a big-ass piece of cardboard. Did I mention the cardboard? Maybe not. Go get some cardboard. Don’t worry, I’ll look after your drink.
Oh, and grab a marker while you’re there.
Once you’re back, here’s what you’re going to do.
Family Budget: Objectives
Let me explain how to manage a simple family budget.
You, or you and your partner, are going to write down (on the cardboard) all of your goals and objectives. All of them. Don’t stop, just keep rattling out things you would love to achieve in your life. Some will require money. Some won’t. For the objectives that do require money, put a ballpark cost next to your goal.
For example, I might write, BUY A NEW CAR $20,000.
Spend the next hour doing this, writing down all of your goals. Goals for you, goals for your partner, goals you want to achieve together, goals you want to achieve as a family.
Write them all down. Your goals are the main reason for having a budget.
I’m serious about the one hour thing too. Keep sitting there, sipping on your Pina Colada, until you seriously cannot think of any other objective in the world that you would like to achieve in this lifetime.
That’s your first step. But it’s also the most important, because your goals and objectives are going to be your guiding light for the rest of your family budget. These goals and objectives are going to serve as your purpose for sacrificing something today in exchange for a more fulfilling tomorrow.
Once you’ve written out all of your goals, you need to put dates that you want to achieve them.
And I’m talking a specific date, like 1st of March 2021, for example – the precise date.
Do this for every objective.
Now, figure out how much you need to put aside for each objective, as individual items.
Y’know, it might be $20 per week for my ‘vacation overseas goal’ and $30 per week for my ‘new car goal’ and $18 per week for my ‘annual family camping trip goal’ and $100 per week for my ‘deposit for a new home goal’
Remember, a solid household budget doesn’t require credit cards. You don’t want to be wasting money paying interest on credit cards, you want to be saving instead. Even if it means finding crazy ways to save.
Once you’ve done this. Ask yourself, “Am I willing to reduce my everyday expenditure down to a level that allows me to put aside the amounts I need to put aside each week in order to achieve my objectives?”
If the answer is no, then you have 3 levers that you can pull.
Family Budget Objectives Lever No.1
Push your goal out to a later date.
By pushing your goal out to a later date, you will have more time to save for it, which means less needs to be put away each week and you can increase your day-to-day expenditure (or don’t have to cut back as much to achieve your objectives).
Family Budget Objectives Lever No. 2
Reduce your goal amount
This involves reducing the amount of cash you need to fund your objective. So, in the example above where I wanted to buy a new car for $20,000; maybe I need to reduce my new car goal amount down to, say, $15,000. This way less needs to be put away each week and you don’t have to cut back as much to achieve your objectives.
Family Budget Objectives Lever No. 3
Scrap a Goal (or 2)
If you’ve pulled lever 1 and 2 every which way and you just can’t seem to achieve all of your objectives, then it’s time to get out the chainsaw.
Decide on which goals and objectives are of least importance to you and begin slashing those pipedreams, so you can focus on the good stuff.
Now all you need to do is setup an automatic transfer every week from your main bank account to a savings account (or investment) for the amount required to achieve all your objectives and there you have it.
Household family budgeting and saving towards your objectives should be simple and easy to implement.
Forget about noting down every dollar you spend. Just make sure you’re saving money towards the stuff that really matters and I guarantee you’ll be a happy camper.
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.