Best Tips for a Family Budget

Having a family budget is very important to me and my family. To be honest, before having children, we didn’t think too much about a budget, but after we started having children and my husband lost his job and was unemployed for almost a year, a family budget became a necessity. Even now, when my husband has a decent-paying job, our monthly payments for housing, utilities, cars, and food for a family of six, can stretch our budget pretty thin at times. When the budget is tight, it can be difficult as a parent to tell your children “no”, we can’t go on that family trip this year, can’t go to the indoor trampoline park this week, or we can’t buy the latest clothing trends this month. While saying “no” to our children can be difficult, just remember that you are also teaching your children how to be financially responsible.

How to Create a Family Budget

Creating a family budget is essential to managing finances and ensuring financial stability, especially in these times of high inflation and rising interest rates. There is no one right way to do a family budget. The best way to do a family budget is the way that works for your specific family. There are, however, some general tips that can help you create a budget that works for you.

1. Set Realistic Goals

Begin by setting financial goals that are realistic and attainable. For instance, you might aim to save a certain amount of money for college funds or retirement. If you like taking family trips every year, set a goal to save enough money from every paycheck to cover this trip.

2. Track Your Expenses

To create a budget, it’s important to track ALL of your expenses like your mortgage or rent payments, car payments, insurance premiums, credit card payments, grocery bills, and utilities (yes, your caramel macchiato from Starbucks needs to be included). You should track your expenses over a 3-month period to determine where your money is going. You can use a budgeting app or a spreadsheet to track your expenses.

Some budgeting apps we recommend:

• Intuit Mint Yes, this is the one with the goofy Ryan Reynolds commercials. The app is free and easy to use for budgeters of all levels. You can also set up bill payment reminders, track investments, and access your TransUnion credit score
• PocketGuard This app is designed to help you stop overspending. The company uses an algorithm to track your income, expenses, and savings goals to tell you how much you can spend every day. These spending limits make it easier to quit overspending and take control of your financial goals.
• Zeta This is a free budgeting app designed specifically for couples, joint finances or not. The app caters to all types of couples, including those who are living together, engaged, married, or new parents. You can sync various accounts to track spending, see your net worth, and manage bills together. You can also sign up for a joint no-fee banking account and cards with features like no account fees, digital checks, access to the Allpoint ATM network, contactless payments, and bill pay.

3. Determine Your Income

Next, take a look at your income. How much do you bring in each month? Be sure to include all sources of income, such as wages from a job, child support payments, and any other money that comes into your household on a regular basis. Once you know how much money you have coming in each month, you can start to figure out how much you can afford to spend.

4. Categorize Your Expenses

Organize your expenses into categories. Some of your categories might be broad and general such as housing, transportation, groceries, health, entertainment, etc. You might also want to track specific expenses like eating at restaurants, your cell phone bill, or the daily, “I can’t do without”, caramel macchiatos from Starbucks. These categories will help you to understand which aspects of your lifestyle consume most of your income.

5. Prioritize Your Expenses

It’s essential to prioritize your expenses as per your income. You must separate mandatory expenditures like rent, utilities, insurance, and other fixed expenses from discretionary expenses like shopping or eating out.

6. Create a Budget Plan

Based on your analysis of income and expenses, create an actionable budget that balances income and expenses, making sure you allocate your income in the areas of your family’s priority. Begin by paying yourself first. This is done by including savings and an emergency fund in your budget. Many financial experts recommend saving 10% of your income and your emergency fund should cover at least 3 months of your total living expenses. Once you have taken care of yourself, you can start allocating money for your regular expenses and then your discretionary expenses.

7. Keep Reviewing and Modifying

Your family’s budget must be reviewed and modified regularly, as your income and expenses fluctuate. Check if you are meeting your set financial goals and modify your family budget strategy accordingly.

Sticking to Your Budget

Now that you have a family budget plan, the hard part begins…sticking to the budget. This is where learning to say “no” or “maybe next month” to yourself, your significant other, and/or your children is an important part of sticking to your budget. This is a hard lesson to learn for many people. It was hard for me, especially when our 1st child was born. The urge to give my child everything was very strong.

The best way to stick to your budget is to track your spending. There are a number of ways to do this. If you are “old school” and like to use paper and pen, I recommend that you use a Dome Book (affiliate link) to log and track your expenses. If you prefer something easier and mostly automated, try one of the budgeting apps, Mint, PocketGaurd, or Zeta that I mentioned earlier. All of these tools will help you track your spending and see where your money is going each month. This information can be invaluable in helping you make adjustments to your budget so that you can save money.

Another key to sticking to a budget is to have a plan for when you do overspend. It is inevitable that there will be times when you spend more than you had planned. When this happens, it is important to have a plan in place so that you can get back on track. This might mean cutting back on some of your regular expenses or finding ways to make up the difference in other areas.

Need some inexpensive ways to entertain your children but the budget is a bit tight at the moment? Check out my post “Best Classic Screen-Free Activities for Kids“. There are numerous inexpensive activities listed that children enjoy!

Conclusion

Remember, there is no one right way to do a family budget. The best way to do a family budget is the way that works for your specific family. By following these tips, you can create a budget that works for you and helps you save money each month. By following these tips, you can create a comprehensive budget plan that helps you achieve your financial goals while keeping your family’s expenses in check. With proper budgeting, you can ensure that your family has financial stability and security in the long run.