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Developing a family spending plan

Posted November 20, 2013 in Advice Column

Most people don’t like the word “budget.” It’s restrictive and suggests we can’t spend money on anything. In reality, it sounds too close to the word “diet.”

With the holiday season here, the last thing you want is to have additional stress placed on you or your family due to money or finances. With a few simple steps you can greatly reduce any stress and help your wallet with some organizing of your money.

Instead of a budget, create a “Family Spending Plan.”

The family spending plan allows you to map out the areas where you and your family will spend money on a weekly or monthly basis. Different from a budget, a spending plan helps allocate money for the activities you really want to do, while underscoring the expenses and investments that are of high priority to the family.

“Want to go to a baseball game at the end of the month? Great, we’ll put that in the spending plan and adjust the amount we have to go to the movies.”

It’s not so much about limiting what you do, as prioritizing what you’re going to spend money on. One activity may have a higher priority than a shopping spree for clothes. The shopping spree may just be moved to another week or month. Either way, it will eventually become part of the spending plan.

The keys to a successful spending plan are:

To include everyone in the discussion with Mom and Dad having the final say and

Making sure that the spending plan takes into account how much take-home pay is coming in, subtracting savings and investments and including monthly household expenses like the mortgage, utilities, car payments, etc.

Developing a family spending plan is a great way to begin open communication with your children about smart money management. By helping them understand how to allocate money to certain priorities, they’ll soon become more aware of their own spending and increase their own financial well-being.

Information provided by People’s Credit Union, 310 First St., Webster City.  For more information, call People’s Credit Union at 515-832-6346

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