Since school will soon be out and the kids will be home for the summer, families worry about how they will stretch the family’s money. Creating a budget and following it can be helpful!
The word “budgeting” often elicits a negative initial reaction, but in fact, this process and the resulting budget are very beneficial. A budget is a financial spending plan, a tool families can develop to help them use their money more effectively.
As with many things in life, communication is key to developing an effective budget. It takes communication and teamwork to make financial planning work. Research indicates that there are far fewer arguments when everyone shares financial decision-making and when parents communicate openly with children about the financial situation. When people have different values and attitudes about spending and saving, or when people strive for unrealistic goals, there is a risk of conflict. If you don’t talk, even the most feasible spending plan may not work.
For effective communication about money:
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— Set up a regular time to talk about money in a place where you won’t be interrupted.
— Clarify the problem at hand and stick to the topic.
— In family situations, recognize that whoever earns the money has no right to dictate how it is spent. Make financial decisions as a team. Allow each person to freely express their personal desires, needs and feelings. Avoid judging or criticizing others.
— Be prepared to negotiate and compromise.
It is important to sit down as a family and set financial goals. Short-term goals are what you want to have or do in a year, while long-term goals are what you can achieve in the years to come. People who set goals are often more successful than those who don’t: they know where they are going and what they want to accomplish.
Here are some budgeting tips to help you:
– Keep it simple. Unless absolutely necessary, do not detail your plan to the penny. Keep track of the nearest dollar.
– To be realistic. Consider all expenses, including vacations, pocket money, alcohol, tobacco, and hobbies.
— Build a safety margin into the budget plan by overestimating expected expenses and underestimating likely revenues.
— Keep planning your budget and keeping records until you find a system that works well for you.
— Include personal allowances for everyone in the budget plan. A personal allowance, no matter how small, tells you how much money is available to “blow away” when the urge strikes.
— Don’t try to use someone else’s budget and expect it to work for you. Know that these budgets on the Internet and in magazines are for a particular situation that does not correspond to yours. Fit your own budget.
— Distinguish between wants and needs. Buy what you need first. Put desires in the “what’s left” category.
— Borrow carefully. Remember that you create a fixed expense each time you charge something.
— Develop an emergency fund to meet unforeseen expenses.
To learn more about the financial situation of families, consult: https://child.unl.edu/budgeting or contact your local Nebraska Extension County office.