Why do you need to have a family budget?


Quick Answer

A family budget guides spending, increases savings, identifies wasted money and bad spending habits, helps with goals, and gets everyone on the same page. A budget is a simple way to track all of the money in and out of the bank account.

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Full Answer

With multiple family members spending money, it is often difficult to track bank account balances and overall spending. A budget uses the total income for the family and divides it to various spending categories, including fixed expenses, such as mortgage and car payments, and variable expenses, such as groceries. By allotting certain amounts of money to each category, the family keeps better track of spending and ensures all bills get paid on time.

The budget spells out all of the monthly expenses to ensure all family members know what is going on financially. It serves as a communication tool to ensure no one overspends, using money that needs to go toward bills or other expenses. The budget gives everyone in the family a better picture of the current financial situation to avoid spending money that isn't available.

Better control of the family's money often means less wasteful spending. With more money in the bank account, the family creates a cushion for financial emergencies, puts more toward savings, or frees up money for retirement accounts. These benefits all lead to a more stable financial future for the family.

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