Considering debt management is a long term project that affects the whole family, the best thing to do is to get the whole family involved. One way to do this is to call a family meeting, sit down together and explain that there are going to be some changes, and why these changes are necessary. Even younger children need to get involved in order to understand the changes that are coming, and appreciate that they are going to be for their benefit.
Once you have explained to the whole family why it is necessary to implement a budget you have to make it visual for them, especially for children. You may like to sit down at the table and pull out all the bills you can find. Every bill can then be judged and categorized. Each one can be put into a separate pile. One way to classify bills is by their frequency – for example some expenses such as mortgage or rent payments, and utilities will be payments of an ongoing nature and are a necessary part of having somewhere reasonably safe and comfortable to live.
Another pile may contain bills that represent onetime expenses, like a mail order or credit card bills you want to pay off. You will obviously have other expenses such as groceries or fuel which are necessities but for which you do not necessarily receive a paper “bill” as such. If it is easier to visualize, you might like to right “groceries” and an average weekly or monthly spend on it to represent these types of expense.
Once you have piled all of the bills you can prioritize them. The most important ones are the ongoing bills that need to be met each month. These are the bills that put a roof over your head and the heat on in the house. Next in order will be groceries and other costs which ensure that you and your family can do the things they need to do. (For example, if you need to drive or take public transport to work or school, the costs of that transport will be included here.)
While you may not know in advance exactly what these costs will be, it should be possible to make a reasonably close estimate based on previous expenditure.
Once you have the necessities covered, you can start balancing your new budget. Make a list of your reliable income for each month and compare that to your list of ongoing and necessary expenses. If you have money left over after covering these expenses, you can use that to pay of the one-time bills or pay extra on your debt, creating the situation where you gain money when the debt is paid off.
When you don’t have any money left after paying for necessities, hard but crucial decisions have to be made. This may mean that you need to look at downsizing the family home or vehicle(s), or that you have to provide some kind of extra income. When your children are old enough they may need to get a job to pay for their own entertainment or clothing.
These decisions may be met with some level of complaining from the whole family, but when you have been completely honest and showed them what the situation is, they will come to understand, and appreciate that learning about balancing a budget can be a useful family exercise.