Effective personal budget planning will help you to meet your goals of financial management, not deprive you of them. In this series of articles, you will learn the steps to take to help prepare you for all that life throws at you.
First, gather your family together and discuss exactly what your goals, as a family, are. Everyone will have their own personal goals and those for the family as a whole. With your children, this will be a great time to teach them what your values are and pass on to them a legacy of living debt free.
You might decide to begin paying off your credit card debt, with a view to eliminating your reliance on credit cards altogether. Other worthy family goals are to begin paying your home off faster and save money for a family vacation.
List and Prioritize Goals
Develop a list of your most important goals. It is vital that every family member shares input as to what goals they would like considered. Next, figure the real cost to achieve each goal. The real cost includes any taxes, fees, or associated incidentals. You do not want to come up short. Always consider the cost before proceeding.
Some goals will have on-going costs and some will be a one-time expense. In personal budget planning, split the costs down to reflect the monthly expense of achieving your stated goal. For example, if a $200 trip to an amusement park is decided upon, then over a 12 month period, about $17 per month needs to be put aside.
Now, prioritize your goals. Decide which ones are most important. Some goals may be more pressing because of time constraints. Perhaps the family vacation can only be taken in the summer because of school and it is now already Autumn. Maybe the credit card companies are hounding you for payments and this makes their payment a higher priority. Or you have fallen a month behind on the mortgage. There are many factors to consider when prioritizing your goals.
Do not forget that everyone should get a say in making this determination. Personal budget planning only works when each and every member of the family is given a voice. Without the cooperation of every family member, it is likely your family budget will fail. Where would that leave your goals of good sound financial management for living debt free?
A Trial and Error Process
Now, do a little math. Compare your income and your expenses and determine if it is practical to believe that you can currently reach all of the goals you have set. You might have to target some non-essential expenses for elimination. Perhaps, you went a little overboard and you are attempting to achieve too much at once. Is that $200 amusement park trip realistic right now?
Don’t fret. Remember that personal budget planning is a work in progress. If it seems impossible to meet all of your goals at this moment in time, prioritize again. You don’t have to eliminate any of your goals, just move a few down the line to revisit at another time. Preparing a family budget is a trial and error process that will eventually allow you to meet all your financial management goals to live debt free, just not all at once.