As I continue to discuss the importance of providing financial leadership in the home, I want to point out that I am not approaching this as exclusively, or even primarily, the husband’s or father’s role. In some cases, the role of administering the family’s finances falls to the husband and in others to the wife. Some couples choose to perform the tasks jointly or interchangeably. In still others, one handles the bill paying and bookkeeping chores while the other makes more strategic decisions. This structure is often based on skills, interests, or availability, and I don’t believe that any one is necessarily better or more effective than the others. That said, both spouses must ultimately be in agreement on the choices that are made…especially in regards to the family budget (please see my earlier post regarding the importance of a Budget).

An important area where there must be thought and agreement is in Giving. Will any of the family’s income or other financial resources be used to meet the needs of others, outside of the family? It may be as straightforward as traditional tithing to one’s church or as spur of the moment as helping buy groceries for the person ahead of you in line at the supermarket who is short of cash to cover what they have in their cart. It might be contributing to the United Way at the office or directly to charities such as the Red Cross for earthquake or hurricane relief. Giving is a very personal thing. What seems a very worthy or important cause to one may seem silly or naïve to another. But the point is to share one’s resources with others in need.

Assuming a family decides that it does have an obligation or at least a desire to help provide for others, the giving must obviously be built in to the family’s budget. As we discussed in a previous post, this does two things.

As we continue to look at a leader’s responsibility to take a proactive and intentional approach to managing their family’s finances, I want to state that I do not intend in this series to focus on the critical importance of eliminating financial debt. The crushing impact of adding the cost of servicing debt (i.e., interest) to the family budget has been well documented by many authors, counselors and commentators…most notably, Dave Ramsey. And actively and aggressively working to reduce and eliminate debt will have an even larger impact on the monthly budget in the short term. But it must be done. My assumption in this series of articles is that any necessary debt elimination is built into the family’s budget.

Another critical category of the family budget is Saving and Investing. When it comes to budgeting, most of a family’s monthly expenses are known and somewhat predictable. The rent or house payment are constant each month. Purchases of food and clothing can be controlled in most cases to remain within a preset spending limit. Although the electric bill can fluctuate greatly during different times of year, prior year usage can be a good predictor of what to expect in the future, so it also is predictable. However, car repairs, medical expenses for illness or injury, or a water heater that goes out (as mine recently did) are much harder to accurately predict. So the first type of Savings that must be built into the household budget is for emergencies and unpredicted expenses. Call it, as Dave Ramsey does, an emergency fund, or just call it good old boy scout advice to “be prepared”. Regardless, if you’re buying things you want but don’t need and not saving for unforeseen expenses, you are not managing your resources well.

The second type of saving is

In my recent post about Financial Leadership, I stated that many leaders find their financial responsibilities at home continually failing to reach the top of their priority list. Other things seem more urgent, more interesting, or just easier. However, finances are an area that a leader in the home simply cannot ignore.

The foundation of financial responsibility, whether in an organization or in a home, is a Budget. Much like other areas of leadership, creating a budget is a proactive, forward looking activity. Simply reacting to financial needs and decisions as they come rather than planning and providing vision is, by definition, not leadership. Most financial obligations are predictable, and even financial surprises can be anticipated and prepared for.

There are many methods and tools for budgeting. With each, the objective is to decide, in advance, how the family’s money will be spent. Beyond the basic food, shelter, and clothing, it also requires determining what is (or what should be) important to the family, and often times prioritizing those discretionary items. My goal here is not to provide a “how to” lesson or to give financial advice, but rather to encourage you who strive to be leaders to take this basic step if you haven’t already. Having a carefully prepared budget provides the justification to say “no” to discretionary spending that cannot be supported by the current income, and it also makes it easier to say “yes” when the family wants something that is within its means and consistent with its values.