Family Budget Project

When it comes to budgeting, sometimes it feels like one or both parents wind up being the bad guy. Other family members really don't understand and support the financial constraints and objectives, which leads to family tension. If everyone in the family had input in the budget, it could create harmony and a more stable family economy.

Figure out what your goals are. They might begin with, "I don't want to be the family Scrooge anymore." Then consider some ways to make that happen. How do you make everyone responsible for the outcome? What cutbacks can you anticipate that they might have to make -- such as fewer trips to the movies. And what rewards can you come up with to make that more palatable: such as a percentage of the combined family savings. How are you going to handle shirkers? Try to anticipate as many of the issues as possible and come up with some options for family members to choose from.

You may have to structure your presentation of the budget a couple different ways for different aged kids. Maybe even have two meetings. If you have small kids, chances are their desire to please and the opportunity to contribute to the "grownup" job of budgeting will carry them through with enthusiasm. At least for a day or two. With them, you may not need to go into the same detail of explaining the family finances. With older kids, it's a good idea to give them a head start on understanding how life works if you don't make it as a rock star.

At the family meeting, have food. Make it a pleasant occasion. Explain that your family is spending more money than it should. Structure an explanation of family goals that is only as detailed as it has to be. Instead of breaking insurance down into property, health, life and home, for example, you might just put it under insurance and explain that it has to be paid. Show how much money is left over after rent, groceries, insurance, debt and education and all that that amount is supposed to cover.

Have each family member make a list of his or her individual needs. What might they need for a clothing allowance, for example, and are they including soccer cleats or winter coats? What about movies, trips to the skate rink and burgers with friends? Tell them to be sure to be only as frugal as they are realistically willing to be. Have them find reasonable prices for each item online and create a personal monthly allowance. This might take some time, so you might want to reconvene in a week or two. When you do, have each person show his or her list.

Add up all the lists. Chances are the amount will be way more than you have. Come up with a reasonable allowance for each child based on what you have to spend and what they believe they need. Explain that they have to fit their needs and wants into that allowance. Let them make the choices about what to forfeit. This will be hard at first, while they are learning.

Explain that there are ways they can help increase the family pot. They can change habits that run up the energy bills, such as leaving the refrigerator door or outside doors ajar or failing to turn off lights. A significant amount of that may provide more spending money. They can also take care of things they own and sell those they don't care about in consignment shops or garage sales. If it works for the parents, they can have lemonade stands or get part time jobs. Help them take responsibility for providing for things they want.

Getting the budget plan started is only the beginning. You will need to keep track of each person's contribution, including paying attention to which kids are turning off the lights and which are not, and then grade them according to age. For the first few months, the family budget will likely require a lot of work. But once it becomes standard operating procedure, it has the potential of developing a more harmonious, more financially stable family.