Budgeting in a family business is a way of keeping the income and expenditure in line with the objectives of the business as a family venture. Drawing up a budget and having the discipline to follow it through will set the family on the right path of financial prudence. Beyond this, it helps improve the quality of their expenditure even when it is for a machine, birthday or holiday.
There are so many positive things that can be derived from making effective budgets in a family business, but it can be difficult to start. It usually takes one interested or concerned member of the family to kick-start and spearhead it. However, budgeting in a family business cannot be successful unless there is a concerted effort by those who should participate. Both spouses should get involved if they want it to be a success and as the situation permits, it would be better if other members of the family (the kids) are also included.
Even in a family business, getting your spouse to be interested in budgeting could be a challenge, not to mention getting the whole family to be excited about it. Below are a few suggestions on how you can get them interested in budgeting.
Your spouse, which may seem to be the most difficult to convince, should be the easiest. There are several reasons why your spouse should be interested.
The Financial State of The Family
People tend to spend according to their income, meaning, those who earn more spend more. Whichever is the situation, the financial state of the family is a compelling reason for your spouse to come to the family budget table. The only exception is when they are not aware of financial state of the family. Making them aware and presenting the solution "family budget planning" can provide might just convince them to join ranks with you. The main issue here should not be between you and your spouse.
You both need a united front when it comes to the financial state of the family business and any positive thing that can add value to it should be enough to get your partner on board.
Convincing Your Spouse That it Will Help The Kids
Family budgeting can help parents provide for the kids. They get to understand resources they can shift to the children. They get to use what they have designated for them better than when they never sat down to plan for it. Issues like birthdays, college fees, and family holidays have to be properly planned and from the time of the budget planning, so that, it will not interfere with the running capital of your business. There might find out that they do not have enough. The planning does not just show the state of their finances but since budgets are future estimations, it gives them a chance to do something about it.
Major projects that has been planned could get the spouse interested because they will want to know their financial capability.
Using this can convince them to sit at the table. There could be major projects ahead and getting the family together to look at their books and know how they can go about achieving this will get them gingered up. Projects such as upcoming family holidays could be used to rally the family around the idea of drawing up a family budget. It would of course cover more than the holidays.
Start Well: Looking At The Big Picture
Use a family budget to look at the big picture. This may involve looking at major expenses that will be coming up and looking at sources of income. Placing the projected income beside the major expense can give a good idea of the direction the family should be heading. Having a more detailed family budget is possible and can be done by the individual that is spearheading the drive.
The big picture serves to give everyone involved something tangible to hold and it could be a way of encouraging financial prudence in the way each member of the family handles money.
Stick to Your Budget Plan
Family budget plans also serve as an expenditure guide. Once you have projected how much you spend a week on important things like groceries, you might also get to know the amount you spend on things you do not really see as being important. Budget planning gives you a chance to cut down on your expenses. However, it is one thing to know where you should not be spending and it is another thing to stick to that plan. This is why family budgets should be a team effort because you might need the help of your spouse to stick to it. You can stick to your budget plan by:
Hold Regular Meeting to Review Your Budget
This give you the chance to assess your spending as a family and making sure you are in line with meeting your set targets.
Be done by the individual that is spearheading the drive.
The big picture serves to give everyone involved something tangible to hold and it could be a way of encouraging financial prudence in the way each member of the family handles money.
Break The Targets Into Sub-Targets
A family’s annual budget plan might be broken into smaller monthly plans. You get to ascertain your expenditures on a monthly basis and see whether they tally with the target. This gives the family the chance to score themselves and know where they are lagging behind. It also gives them the chance to improve every month.
Your budget might also include other things like projected savings. This could be very important if the family is saving for one thing or the other. Family budget planning is a great way of staying in a healthy financial state.
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