How To Budget Better With Extended Family At Home

How To Budget Better With Extended Family At HomeA lot of people wants the chance to be able to budget better and there are a lot of ways to do this. However, what makes this even more challenging that it already is is when you are managing the finances for an extended family. This instantly increases the amount of work that you need to put in when budgeting your finances.

There are a lot of reasons why extended families exist up until now. For some, delayed marriages in the children is a factor. For others, there are cultural considerations as well as economic factors that come into play. It is also important to know that the recent 2008 recession was a factor in this household set-up as a lot of people doubled-up under one roof. As a result, Americanprogress.org reports that extended families represented 17% of households in 2014.

In light of this, problem areas in your budgeting skills would only be magnified when you are trying to look out after a lot of people in your home. This is because small financial mistakes would tend to have a bigger effect simply because you have a big household. It will not only affect your immediate family but everyone else under your roof.

Imagine if you came up short with the groceries for the week and you are running a tight budget for the month. Where will you get the extra funds to cover what you need? How about if you start racking up the cost of your utilities simply because there are a lot of people using them? Do you simply pay off the bill every month hoping it gets smaller the next month?

Common challenges with an extended family in your home

As you aim to budget better with an extended family under your roof, here are a few more challenges you can expect along the way. Knowing and understanding these can help you prepare better for what financial challenges lie ahead.

More people equals bigger expense

As explained earlier, it simply follows that the more people there are in your house, the bigger your expenses will be. Your food requirement for the whole family would be bigger which means you need to buy more food. There will be a lot of people in your home and depending on the weather, you would see a spike in either your heating or air-conditioning bill.

There are ways to lower your expenses in your budget but that would be a tough hill to climb when you are taking care of a lot of people. You can only do so much to lower down food cost, utility bills, and others and you can come to a point where you can’t lower it down anymore. To make matters worst, there will be times where they will just increase regardless of how you try to lower them down.

Your house would need more frequent upkeep

As Forbes.com shares, you need anywhere from 1 to 4 percent of your home’s purchase price set aside for maintenance every year. This is the popular rule of thumb when you start to look at the cost of upkeep for your home. What might compound the cost, even more, is when there are a lot of people living under one roof. You need to be able to budget better to save up for this cost.

This can simply mean that deterioration can come in a lot sooner for some areas in your house as more people use them. This can be common areas such as the living room, bathroom, and even the steps on your front porch and even with your household equipment even furniture. The more people use them, the quicker they depreciate and would require repairs or replacement sooner than later.

Vacations become pricier

If you love bringing your family out to trips and vacations, this becomes a lot more expensive especially when you try to take everyone with you. It doesn’t look good to leave behind other family members at home while you are enjoying your vacation. Though this is a matter of preference, common decency dictates that it is best to take everyone with you.

Financial steps to consider with an extended family in your home to budget better

The scenarios above are just some of the things you can expect to encounter when you have a lot of people with you at home. Here are some tips on how to manage it better.

Manage expectations

Extended family doesn’t just show up at your front door with luggage in tow expecting to be taken in. Even before they stay with you, you would have time to talk to them about it. During this conversation, it is best to lay out ground and house rules to be able to manage expectations. This can also prevent any misunderstandings in the future

Focus on your household budget

There are a lot of ways to simplify your budget and when you need to oversee a lot of people under one roof, simplicity is your friend. However, you need to remember that the devil is in the details.With that in mind, you need to strike a balance between the two. Avoid generalizing expenses but do not stress yourself out too much either. You can even recruit help from the many members of your household by giving them specific areas to focus on. One can be in charge of food monitoring while others make sure lights are turned off when not being used.

Increase your reserve funds

CNBC.com recently shared the story of how one couple were able to turn their life around with smart financial decisions and one of those is having an emergency fund. You will never know what will happen tomorrow that is why being prepared and proactive can help you address such problems. What you need to remember though is that your reserve funds need to be able to cover for the whole household and not just your immediate family. Having an adequate amount of emergency money will help you budget better.

That being said, it is important to take in all expenses you have every month and work from there. There are some people who try and start to save up at least $1,000 for emergencies. Once they reach this goal, they then continue on to add to that amount. The objective being is to have at least six month’s worth of expenses stashed away for emergencies.

Increase income and lower expenses

There is no denying that the more people you have in your home, the costlier it is to run the household. During these times, lowering expenses and increasing your income will come in handy. These two financial decisions have helped a lot of consumers in some sticky situations. You need to remember that the problem lies in execution because increasing income and lowering expenses are both easier said than done.

With that in mind, it is important to take note that they are not impossible to achieve. However, you need to be dedicated and committed to looking for ways to make it happen. This can mean a second job for you or taking up some consultancy after office. It can also mean giving up some luxuries in life to make ends meet.

You will be able to budget better even with an extended family at your home when you have an idea of the challenges that lies ahead. This gives you the opportunity to prepare and even talk to your family members. It is possible that some of them can help out with the expenses at home especially the ones that are already working.