The first step is setting your financial priorities. All family should be involved with this process, because the priorities will have a direct effect on each family member=s life. Being involved in the priority setting process will also help them support the priorities once a decision has been made. One method that we used was to start out with a pile of coins that represented the money that the family brought in each month. We would then take out money for the mortgage payment, electricity, water, gas, food, etc. This would help the children visualize the process and understand that when the money was gone it was gone and we might have to do without some of the things we "want" to make sure that our "needs" are met.

Once you and your family have taken the time to gain a common understanding about what your financial priorities should be you need to evaluate and document those priorities. These priorities should start with the basic needs of the family. For most families those needs include; food, clothing,, and shelter. Beyond those basics some other essentials in our modern world would probably include; transportation, electricity, and the telephone. Although we can physically survive with the first three the "modern" essentials can facilitate us improving our ability to provide the basics.

Once you have an understanding of these basic priorities it is important to look beyond the essentials and consider the importance of things that can enrich your individual lives, and more importantly your lives together as a family. These things may include; Piano or Ballet lessons, Little league or Soccer, cable television and lest we forget the ever important access to the Internet. At this point it is important that we have or put the effort into discovering what things will truly enrich our individual and family lives.

I will suggest at this point that you may have to look deeper within yourself, and actually think about the meaning of your life as an individual and what your purpose for living is. You should also put some thought into your reasons for having and supporting a family. If you have done this thinking and have something documented, like a individual or family mission statement, you will be in a better position to determine your financial priorities. These priorities will either be born or confirmed by this mission statement or a similar document. You can find out more about creating an individual or family mission statement by checking out this book: The 7 Habits of Highly Effective Families : Building a Beautiful Family Culture in a Turbulent World; Stephen R. Covey, and this tape: How to Develop a Family Mission Statement (The 7 Habits Family Leadership Series); Stephen R. Covey.