Are you ready to live with a successful family budget? Since you clicked on this link, it’s likely you’ve at least asked yourself that question. Family budgets, however, are hard to make and harder to keep. The rewards of living within a successful budget, on the other hand, are terrific. Let’s see if one is right for you.

Why Do You Need a Budget?
People get curious about budgets for different reasons. Maybe they’ve found themselves in financial trouble, maybe they just want to buy something big, like a home, or maybe they want to ensure they are comfortable when they retire. One thing is certain, however – you will not create an effective family budget and stick to it unless you really want it.

So the first thing we have to ask is why you think you want to create a budget. Make sure your why is very strong. It could be negative – like trying to pull yourself out of a financial jam – or positive, like buying your first home. But is it important to you? Does it motivate you when you think about it? Are you moved when you think about your goal for the budget? Does it make you cry?

If so, then good – you probably have what it takes to create and follow a successful family budget. Let’s examine the reasons families budget in more detail.

Stop the Bleeding
Most folks get curious about budgeting because they are forced into it. They have found themselves in financial trouble. Maybe they are having trouble making payments. Perhaps their credit cards have been closed, their car repossessed, or maybe they are even in default on their mortgage.

If this is you, don’t fret – you are not alone. People survive foreclosure, bankruptcy, and terrible credit all the time. You will survive, too, and hopefully the stress of being where you are today provides you with the motivation to stick to your new budget.

The good news is that budgets are just math. Not the scary, icky type of math either. It’s really just addition and subtraction, and two plus two always equals four. Of course, you have to know what numbers to add and subtract, but we’ll help you with that, and the answers are not at all hard to understand.

If you are reading this because you’re in financial trouble, kudos to you for being proactive and choosing to do something about it, rather than just being passive.

Pay Off Debt
Some folks get curious about budgeting because they have decided they are too deeply in debt and haven’t been able to make progress paying it off. Budgets are an excellent way to get a handle on what you’re going to have to sacrifice to pay off your debts, and how long it will take to do it.

If you are living with the stress of too much debt you probably see or hear ads telling you that you can eliminate debt overnight, pay only a fraction of what you owe, or by some magical formula pay off your debt with “one weird trick.”

The reality is that paying off debt is a math problem. There is a principal balance which presumably you came to owe by making promises that you would pay it back, and there is interest accruing every month on the unpaid balance until you do so.

Yes, refinancing the debt to a lower interest rate will make it easier, cheaper and faster to pay down the debt but unless you file for bankruptcy or re-negotiate your debt with principal forgiveness (either of which will severely damage your credit) you are going to have to pay it back. And there is one sure way to pay it back faster – pay more principal every month. (Make higher payments.) And yes, that’s the “one weird trick” you see mentioned in click bait.

There is no better way to pay debt off quickly, then than to make a stringent budget that commits
as much money as possible to paying off your debts.

If you are curious about budgets because you are stressed by having too much debt, then a successful family budget could be just the tool you need.

Build an Emergency Fund
Have you ever not been able to pay for an emergency car repair? Maybe you had a furnace quit on you in December? How about a medical procedure for a beloved pet? These things have happened to me, and it motivated me to always have an emergency fund that would cover any unexpected, but necessary expenses.

In an ironic twist, considering the subject of this article, you can’t really budget for unexpected expenses – they’re unexpected. You can, however, budget to create an emergency fund.

How much do you need? That’s up to you. What’s the most money you’ve ever needed to handle an unexpected expense? Someone with a 4,000 square foot home and a Mercedes Benz will need a much larger fund than someone who rents and drives an old Honda. Look back and figure out what the biggest unexpected expense in your life has been so far. Multiply that by 1.5 (because of inflation and the nature of unexpected expenses to get bigger over time) and use that as a benchmark.

The focus of your budget will become doing whatever you need to do until your emergency fund reaches its target. Once you’ve reached your target you can redo your budget to achieve a different goal. Such as:

Saving for Something Special
Now let’s talk about the fun purpose for budgeting – rewarding yourself for a job well done. Most Americans still dream of one day owning a home, and there is nothing better for a young family than having a place where you can create memories and know that it will always be yours.

Alternatively, while you could finance a new car, it is much less expensive to pay cash for it, so why not put off buying one until you’ve saved enough to do so? And life is not only about working. Fabulous vacations can help make anyone happier, and are terrific rewards for achieving something important.

If the purpose of your budget is because you have your eyes on something special that you want to buy for you or your family, congratulations! You will have more fun creating and sticking to your budget than most. Dream big before you start to create your budget. The budgeting process itself may knock you back a little, but start out with a really big vision – you’ll find it very motivating.

Save for Retirement
According to a study released in 2015 by the Insured Retirement Institute, half of all retired baby boomers have no savings at all, and are entirely dependent on Social Security and pensions. Other studies come to similar conclusions – that most people do not have enough money available to them for a comfortable retirement.

Of course, these studies are usually conducted by industry organizations or companies that have a vested interest in getting you to save money to invest in products they sell, but even so – it’s a little scary to imagine retiring with a mortgage payment and no retirement savings at all.

If you are like most people, you will not be wealthy when you retire. However, at the very least it would be nice to be comfortable – to have enough money to take care of basic needs, cover emergencies, and maybe do a little traveling with your leisure time.

The way to do this is to set a savings goal for retirement, determine how much you need to set aside every month to reach that goal, and then set that much aside in your retirement account every month, no matter what.

This particular purpose is one of the hardest to successfully stick to your budget for, because retirement seems so far away for most folks, and the savings goal invariably seems like such a monumental task. However, people who do reach this goal and retire with the dignity and grace that an adequate savings account provides are very grateful that they did it.

Conclusion
Now that you know that you want to create a successful family budget, and why you want to do it, let’s examine who should be included in the process, what should be included, and how to determine your budgeting numbers. You are on your way to achieving your financial goals!

Sara Colley, staff writer
Financial Help Desk