INTRODUCTION

"The average family exists only on paper and its average budget is a fiction, invented by statisticians
for the convenience of statisticians."
Sylvia Porter
Unlike the quote provided above, seemingly reflective of general opinion on family budgets today,
we will attempt to take a much more positive approach to budgeting, as a family oriented, user-
friendly, financial management and planning tool and life-enabler.
However, when reflecting on family budgeting and inquiring as to why not more families are actually
using it, it becomes self-evident that similar skepticism runs rampant and deep in reality and society,
even globally so.
Once you start probing family budgets, expending time and energy researching the subject in-depth,
it becomes quite clear, that most families are caught in a vicious, almost never-ending cycle of
“What comes in must go out.”
Most families might feel that budgeting is a futile effort, unnecessarily burdening them with
thoughts and ways, to go broke methodically and slowly, without the creature comforts and
indulgences of our human modern-day society.
Others might voice that they feel as if they are merely throwing money away, in a never-ending and
dizzying spiral of spend, spend, spend. People are getting deeper and deeper into debt, no matter
how hard they try to get out of it. Questions are then raised : How do we stop these courses of
action? How do we change the thinking around family fiscal discipline?
Put simply, in “How to set up a Family Budget”, we focus in on how to empower families to set up
better, more realistic budgets, stick to them and celebrate their successes (and learn from their
failures!)
Families eventually do have a monthly surplus, see their savings start to grow, consolidate their
debt, set aside discretionary funds and personal allowances, build their wealth and become more
aware of their pro-active involvement and responsibility regarding their lives and finances. This is
when excitement builds and fundamental thought patters as well as spending attitudes are
changed.
Budgeting is seen as an accurate measurement of success when significant behavioral
transformation is taking place on the landscape of the family budget, spending habits and financial
patterns we observe over time!
Do you ever feel that you do not have enough cash at the end of the month to pay bills, buy
necessities of life? Are you barely making a dent in your credit card debt balance, no matter how
hard you try?
Here is a reality check for all of us: if we choose to spend it, it is gone for good. We cannot spend it
on anything else. Are you perhaps worried about a nest egg for your golden years or savings for early
retirement? Then you have arrived at a source that can provide some prudent tips on how to start,
finish, implement, stick to, revise and refine a family budget.

The family budget is a dynamic process, even more so than a mere static work-product, result,
process-outcome or document. It will, can and should change over time. It becomes a barometer of
a family’s fiscal circumstance, resources and health.
Maybe budgeting is not as much about reflecting on what you cannot have, but more about
thoughts on how to stretch, invest and spend your earned dollars more wisely. In short, it is about
making your money going further.

Objectives of Family Budgeting

The objectives of family budgeting work together to help you achieve the things you want in life,
including financial prosperity. Older children will benefit from being included in the process, as they
will learn the knowledge and skills to support themselves upon reaching adulthood. Effective family
budgeting has to account for spending that does not have receipts, such as the vending machines at
work or going to the laundromat.
IDENTIFY YOUR GOALS
Each family will have different goals, depending on your lifestyle and the cost of living where you
reside. For example, a family living in a high-priced city might have the goal of moving to its less-
expensive suburbs to find an affordable home. Other family goals include saving for college,
affording a special vacation, planning a comfortable retirement, or starting a business.
CONTROL SPENDING
The most important component to control spending is having all family members in agreement with
the new budget. Divide the budget into fixed and flexible categories. Fixed categories are those you
cannot change, such as a housing payment or prescription medicine. Flexible categories are those
that you have at least some control over, including groceries, utilities and entertainment. Once the
family members make a list of all spending, they can concentrate on the objective of reducing each
flexible budget category to a minimal amount. This frees money toward achieving the goals your
family identified.
DESIGN A SAVINGS AND INVESTMENT PLAN
Emergency savings should equal enough money to support your family for the number of months
your profession averages when looking for work. According to the Bureau of Labor Statistics, 40
percent of people who lose their jobs are unemployed more than six months before finding another
job. Set an objective of building savings as a cushion against emergencies, including loss of income. If
any of your goals will occur within one year, then include this amount as short-term savings. Long-
term investments will fund your other goals, including retirement.
ELIMINATE DEBT
Financial prosperity will occur faster once you have eliminated debt, especially high-interest loans
and credit cards. There are two common ways of tackling debt. One method pays extra budget
money toward the highest interest debts first, with the intention of having more of your dollars go
directly toward principal. The other method, called snowballing, entirely pays off the smallest debt
first to lower the number of creditors. This is helpful if you might lose your job, as there will be fewer
monthly payments each month should you need to cut back to the minimum amount.

The Importance of a Family Budget

An operational budget is a plan on how family income should be spent to provide for family needs
without incurring debts or deficits. It is the parent's primary task to prepare a family budget.
However, every member must also know how the family income is budgeted. Through budgeting,
family members learn to spend money wisely, thus, saving money which could be used for other
family needs. Resources such as time, energy, and utilities are also used well when income is
budgeted.
In budgeting one must consider the size of the family, its income, the needs of the family and the
locality where the family lives. For a budget to be workable, income should be adequate enough to
meet the prioritized needs of the family.
1. Food — In the situation where there is a baby in the family or there are members with
special conditions who need a special diet, there's also a need for additional money to be spent for
food.
2. Shelter — Does the family own the place where they live or is it only leased? This is important
to know because expenses for house repair must be part of the monthly budget. If the family owns
the property, then payment for the real estate tax and fire insurance should be set aside yearly.
3. Clothing — Every family member has different clothing needs. His/Her activities and family
status in the family must be considered.
4. Education — Tuition fees and school needs such as books and other supplies constitute expenses
that must be provided for, especially the daily school allowances.
5. Household Operations — If the family has helpers, provisions for their salaries should be a part of
the monthly budget.
6. Utilities such as water, electric and telephone services which are paid monthly.
7. Medical and Dental Care — Expenses for healthcare of the family must be provided. Medicines
properly prescribed must be always available at home for ready use when needed.
8. Rest and Recreation — The family needs rest and recreation after work and study.
9. Savings — The money saved can be used in emergency situations. It can grow also in the form of
investment.
Pointers to keep in mind when making family budget.
1. Know your income - a clear idea of just how much can be provided for family needs.
2. Determine which expenses are fixed and which are flexible by making a list of monthly needs.
3. Base the budget on a system of priorities.
4. Have a record of expenses.
5. Make allowances for savings.

Presentation and Data and Information

Category Percentage Annual Amount Monthly Amount

Total Income 2000

Taxes 0

Net Spendable 1500

Percentages below are for percent of Net Spendable

Net Spendable

Housing 1000

Food 300

Automobile 200

Insurance 100

Debt Repayment

Entertainment and Recreation 200

Clothing

Savings 200

Medical/Dental
Miscellaneous

School/Childcare

Investments

Average annual expenses (2012) per household in the United States are:[1]

% Change % Change
Category 2010 2011 2012
2010-11 2011-12

Food at home 3,624 3,838 3,921 5.9 2.2

Food away from home 2,505 2,620 2,678 4.6 2.2

Housing 16,557 16,803 16,887 1.5 0.5

Apparel and services 1,700 1,740 1,736 2.4 -0.2

Transportation 7,677 8,293 8,998 8.0 8.5

Health Care 3,157 3,313 3,556 4.9 7.3

Entertainment 2,504 2,572 2,605 2.7 1.3

Cash Contributions 1,633 1,721 1,913 5.4 11.2

Personal Insurance and pensions 5,373 5,424 5,591 0.9 3.1

Other Expenditures 3,379 3,382 3,557 0.1 5.2

Total 48,109 49,705 51,442 3.3% 3.5%

Budgeting Basics - Conclusion

Budgeting is an important component of financial success and one that's not difficult to implement.
Let's recap what we've learned in this tutorial:
 Budgeting isn't just for poor people or for times when money is tight or your life is
undergoing a major transition. Budgeting is for everyone because it makes it easier to
achieve financial goals of all shapes and sizes, whether that goal is to stay out of debt next
month or to pay cash for a sports car.
 Budgeting allows you to make long- and short-term projections about your financial
situation, prevent crises, get the most out of your money, plan for major life changes and
enjoy peace of mind.
  Budgeting systems - ranging from a simple notepad and pen to online financial management
software - are available for all needs and preferences.
 Budgeting monthly, rather than by the paycheck, can help you learn to take a longer-term
view of your finances. (For related reading, see The Beauty of Budgeting.)
 Keep track of all your expenses, not just the big ones. Those daily lattes can add up!
 Getting a basic sense of your financial picture is an important component of budgeting.
Make sure you know how much you make after taxes and how your required and optional
expenses fit into that picture.
 Being flexible with your budget categories and allowing yourself affordable rewards will
prevent budgeting from being a drag and help you stick with it.
 A well-maintained budget can help you meet short-term goals, like saving for a vacation, as
well as long-term goals, like saving for retirement.
 Avoid budgeting mistakes like being so frugal it makes you miserable or ignoring the time
value of money. Since you've already learned about these and other common budgeting
mistakes and how to correct them, you probably won't make them. If you do mess up,
remember that you're only human. Forgive yourself, correct the mistake if possible and vow
to do better going forward. (For more, read Get Your Budget In Fighting Shape.)
 A budget should evolve as your circumstances change. Don't expect the budget you made at
25 to still work for you at 35 or even 27. Your income and expenses will change over time,
often annually. For example, if you get a raise, you'll want to adjust your budget to reflect
how you want to spend or save the extra money.
As long as you're spending within your means each month, a budget is a great tool for helping you
sleep soundly at night. You know where your money's going, you know that you're on track to meet
your financial goals and you know that you've planned to weather the storms that will arise from
time to time. If your spending is too high for your income, a budget serves as a pesky but necessary
reminder that you need to change things - and the sooner you listen to those irksome numbers, the
better off you'll be. Living paycheck to paycheck only works temporarily - sooner or later you will
have an expense you can't meet or a goal you can't achieve if you don't learn how to budget.

BIBILIOGRAHY
 http://en.wikipedia.org/wiki/Personal_budget
 http://en.wikipedia.org/wiki/Budget
 http://www.vertex42.com/ExcelTemplates/personal-monthly-budget.html
 http://office.microsoft.com/en-us/templates/family-monthly-budget-planner-
TC001023342.aspx
 http://office.microsoft.com/en-us/templates/family-monthly-budget-planner-TC001023342.aspx
 ACTUAL INCOME
SAVINGS

HOUSE MAINTAINANCE

GROCERRY+FRUITS+VEGETABLE
S
MILK

ELECTRICITY+WATER

CONVEYANCE

CLOTHING

EDUCATION+CLASSES

ENTERTAINMENT+PRESETATION
 12000

10000

8000

6000

4000

2000

Family Questionnaire

Would you like assistance networking with other preschool families to help find transportation or
sibling care during preschool functions? Yes No

Would you consider providing reciprocal sibling care or transportation for other co-op families
during preschool functions? Yes No

Do you need assistance meeting parent helping requirements (available on a limited basis)? Yes
No

Would you like to sign-up to do weekend clean-up assignments and receive tuition waivers? Yes
No

Would you like to sign-up to be a paid parent helper? Yes No

Fundraising:
Families have two options to cover the fundraising commitment of $100 for the 2011-2012
preschool year:

[ ] I will participate in the planned fundraising events.

[ ] I would like to buy out for the fundraising event and pay the $100 for the year

Work Party
Every Family commits to taking part in at least one of the 3 work party events scheduled for the
preschool year. If you choose not to participate, there will be a $40 buy out fee per family.

[ ] I will participate in one work part event.

[ ] I would like to pay $40 to buy out of the work party event.