Saturday, March 12, 2011

Guest Post: How to Make a Successful Family Budget


How to Make a Successful Family Budget

The current recession is driving many families toward a more frugal lifestyle, and one of the main reasons is the desire of many families to control spending and eliminate credit card debt. According to creditcard.com, of American household’s that carry a credit card balance, the average amount of debt is $14,750 and the average interest rate is 13.67 percent. Those are grim statistics. Credit card debt is an added burden on families already struggling to pay mortgages, auto loans and student loans. Faced with an uncertain job market and rising prices, consumers are anxious to save money and get out of debt.

Involve the Entire Family

A family must have a realistic budget and be able to stick to it in order to get out of debt. The key is to involve the entire family. Gather everyone around the table when making the family budget. First, candidly discuss how much income the family has, and then explain how much debt the family has. If necessary, explain concerns about the economy and the job market, and the necessity of debt reduction.

Everyone must first agree to take ownership of the budget, accept accountability and hold the others accountable to control spending. The entire family must take responsibility for the current level of debt, and everyone must accept a portion of the pain required to reduce spending. This will help reduce resentment and conflict during the time required to pay off debt.

List All Your Expenses

Scour bank and credit card statements think hard about where the money is going, and get all the bills down on paper. It might be tense, but once the process starts, it will not be long before every expense is listed. When the list is finally finished, make an individual copy for everyone present. Allow each person an agreed upon amount of time to prioritize the spending and cut every expense possible.

When everyone is finished, consolidate the lists. Remove any item that everyone cut from the budget with no discussion. Move on to items that a majority of family members elected to cut from the budget. Discuss these items to decide whether to cut them from the budget. The trick is to spread the emotional pain as evenly as possible. One family member might have a small bill that is very important to them; another might have a much larger bill that they don’t care about. If the family must sacrifice, each family member must feel like everyone is sacrificing or there will be resentment.

After reaching the point of shared sacrifice on all sides, don’t be afraid to tackle the big items. The largest items in a family budget are usually mortgage payments, car payments and food.

Ask Yourself the Following Questions

1. Could we be a happy family in a home that costs us less money?

2. Can we cut our transportation costs by trading down to older, but still reliable cars?

3. Can we cut our food budget by eating more meals at home and not eating fast food?


There is an entire collection of books written to answer each of these questions, and they all offer viable money saving solutions. Depending on the level of debt and the amount of income, radical solutions may be required.


The process of making a budget is never easy, but involving the entire family in the budget making process is the key to bringing spending under control. Everyone must take ownership of the process, be accountable to the family and hold each other accountable to achieve the goal. The most critical step is to get a budget that everyone agrees upon and stick with it.

Alan Winkler is a regular contributor for Debt Consolidation Advice, a debt solutions blog. For debt relief advice, you can check out their articles where they cover topics from debt consolidation to credit counseling, including other money-saving tips.

3 comments:

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