Women and Money: Family Budgets

Women today are more than ever taking a larger role when it comes to the management of their family’s finances. It’s a natural place for them to be as often times they tend to be the ones doing the bulk of the shopping, taking care of the kid’s needs, and managing the entire family’s time in various activities. However, despite this experience, many women lack confidence when it comes to long-term planning of their family’s finances.

This lack of confidence is unfortunate as odds dictate that most women will end up being the sole person to manage their family budget either because of divorce or because of the fact that statistics show that women live longer. Because of the odds it is important for women to overcome their lack of confidence and to take the time to learn how to manage their money now instead of waiting for the other shoe to drop. After all times of stress such as divorce or the death of a spouse is not the ideal time to try to learn how a household’s expenses work.

The first step towards learning about money and effectively managing your household’s money is the creation, monitoring, and management of a family budget.

So what are family budgets?

Quite simply a family budget is a financial plan used to predict future income (the money you make) and expenses (the money you spend). There are several important questions that I like to consider when I am creating a family budget.

4 Questions to Ask When Creating Your Family Budget

1. How much income does your family bring in? or How much income is available for various expenses?
Initially this seems like a pretty easy step, and it can be if your family is used to getting a steady stream of income. However, many jobs such as contractor, freelance, or sales jobs do not have a steady stream of income and tracking how much money is coming in can be fairly tricky. So in order to get an accurate assessment of how much money is at your disposal I recommend tracking your income from the last 3 to 6 months. This can give you a monthly average that can withstand fluctuations and changes. If, however, you have a dramatic change in employment, take the time to re-evaluate your budget to reflect your new income.

2. Have you tracked your family expenses?
You cannot effectively create a working family budget if you haven’t a clue about exactly where your money is going. In “How to Budget”on Kellyology I go over exactly how to track your spending by creating a spreadsheet either on your home computer or by hand.

…you need to record each and every expense down to the penny. I personally set up categories in a spreadsheet for everything including pay checks, mortgage, utilities, groceries, clothing, insurance, medical expenses, car expenses, house maintenance expenses, lawn maintenance expenses, eating out, the kids’s expenses such as soccer fees, school expenses, cafeteria expenses, birthday party presents for others, etc., my personal “going to the movies”category, my husband’s “adult soccer team”expenses, vacation expenses, and on, and on, and on. You may not remember every expense the first time around…you can add categories as they come up.

After you do this you need to divide these expenses into two categories, fixed and variable. Fixed expenses are those expenses that will never change (mortgage payments) and variable expenses can change from minute to minute (medical expenses). After you have created this process of tracking your expenses, you should track these expenditures for 3 to 6 months.

3. Have you adjusted your budget where needed?
What you may not realize at this point is that by figuring out exactly how much money your family brings in and by figuring out exactly how much money is going out you have already created your family budget. It wasn’t perhaps an official budget that you set up consciously, but it is the unofficial plan for your family.

At is at this point you need to decide if you are happy with they plan you are currently living. Think about your life long goals.

• Do you want to travel more?
• Do you want to retire early?
• Do you want to have more kids?
• Do you want a bigger house?
• Do you want to own your house outright?
• How much money do you want to have for retirement?
• Do you want to live without debt?

All of these are the types of questions that you should be asking yourself before you evaluate your current budget. If you are meeting your life long goals that are affected by money then congratulations. You are on target. You may carry on life as usual.

However, if you find that you are not meeting your financial goals then you should move on to the evaluation stage in which you analyze the data you’ve collected to decide where you can most easily cut out spending whether the cuts come from your variable expenses category or with more difficulty from your fixed expenses category.

4. Are you being completely honest with your partner and yourself about your money?
The fact of the matter is that no budget on the planet will work if it doesn’t come from a place of honesty, truth, and transparency. And although the discussion of money may bring up some unresolved emotional issues, or if you are working with a partner and issues may come up because men and women tend to have different views about money, dealing with those issues is necessary to create a working family budget. For more information when it comes to dealing with these emotional issues Psychology Today has a wonderful article called Men, Women and Money, and in it it offers “8 Tips To Talking About Money.”This may be a good place to start to create that honest, truthful, and transparent financial environment that is necessary for a family budget to be successful.

This article was written in participation of Check out all of the other wonderful writers that are participating.. Today’s topic is Budgets, see all the post on this topic here: Women’s Money Week Budgeting Roundup

About Kelly Kinkaid

Kelly Kinkaid, professional blogger and freelance writer, enjoys writing about such topics as stretching a dollar, personal finance, diet and fitness, and living a life well lived. She spends all of her spare time in her many roles including but not limited to soccer, basketball, swimmer, band, and piano mom, runner and wife. You may also contact her on Twitter as @Kellyology, or on Facebook.

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