Family Budget Defined - Elements and Criteria

What is the family budget again? It is a pro-active, hands-on approach, focused, technical and disciplined strategy to getting a handle on the current financial situation in the home and family,

It concerns setting realistic, SMART financial goals for the household, sticking to it, celebrating successes, learning from failures and trying again if you do not succeed or get it right the first time round .It is about shifting focus completely from a mainly spending to a savings orientation. Cash and money-management 101 for everyone!

We have laid out what a family budget is, does and affects. A brief mention of what constitutes as good family budget and the elements that it contains as well as its appearance, format and functional role follows.

All of us have a wish list of new things that we want. There is always things we would find and places to spend our money. Take the time to make a list of these things. Let everyone who shares cost in your home to have input into making and finalizing this list.   Write down what you want most. Beside the goal,  write how much it will cost. Split it into goals with ongoing costs and the cost per month, and goals with a one-time cost and list the actual total cost (including all hidden fees, taxes, shipping and or other charges that might apply. Now,  next to these columns, start to prioritize these goals. 

Which goal comes first?  You need to decide which goal on your list should come first. Talk this over with the other members of your family. If you live alone, think it over yourself. Try to list your top four goals and decide what you can fit into your budget.

A ‘good’ budget is in the eyes of the creator or beholder alike! Some suggested, but by no means comprehensive criteria follows:

• Budget is both process and product
• Collaborative, engaged, hands-on effort
• Characterized by communication and mutual agreement
• It advocates involvement and exchange
• It is real-time and reality-based
• Factual
• Accurate
• A financial check-up and check-in on the family finances, household dollars, situations, behaviors, and resources.
• An action-plan, future-oriented
• Offers a peak into the past, scrutinizes and enlightens the present, while planning and promising a future
• Goal and results oriented

Next article: Five Easy Steps to Start a Monthly Budget

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