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How to Make and Maintain a Family Budget

Money management tips to ensure your family is financially successful every step of the way.

budgeting for families

Family money management isn’t too different from managing a budget as a single person or even as a couple. The biggest thing you need to think about is where your expenses are, and if you need to rethink your spending. After all, kids are expensive. One estimate shows that the cost of raising one child to age 18 is almost a quarter of a million dollars! So, you need a family budget to ensure you can maintain financial stability as you raise your kids.

According to the Consumer Expenditure Survey created from BLS data, in 2016 the average annual income before taxes was $74,664. Unfortunately, annual expenditures made up almost 80 percent of that number ($57,311) which doesn’t give families much wiggle room if something unexpected pops up.

The areas that take up the most of a family budget are housing, transportation and food. Depending on the cost of living in your specific city, it could vary, but these are the big three areas where families should concentrate the most when creating a household budget.

The best tip for family money management is to be detailed when creating your monthly budget.

Basic Family Budget Template

Debt.com offers a free family budget planner worksheet that can help you start thinking about your monthly budget. Use it to fill out your expenses to see where your family is spending the most money, and where you might be able to save.

Download Debt.com’s Free Family Budget Worksheet »

How to Make a Budget

The family budget planner provided above can help you create a family budget worksheet for the month. Understand that each family’s budget will differ depending on their personal situation. Look at your bank statements to find out exactly how much money is deposited on a monthly basis and put that number at the top. Then look through those statements and your credit card statements to make a list of what you spend each month.

Do this for a few months to see if you can identify any spending patterns of monthly costs for items on the budget that vary. Once you have your family budget for a month, you can figure out your budget plan for the year by estimating your costs and expenses as well as how much you can potentially save. You can set target spending in two ways:

  1. Take an average of 3 months of spending in a particularly and set the average as your target spending amount.
  2. For bills that fluctuate seasonally, review the bills from the past year to find the most expensive month. Then set that as your target.

You’ll also notice on Debt.com’s family budget planner that savings is included as a budgeted line item. Including target savings in your budget is proven to help families save money, rather than leaving savings for what’s left at the end of the month. Determine how much you can afford to save each month, then make it a line item in your budget. It’s like a bill you pay yourself!

Money Management for Families

Running a family is more than just monthly expenses. It’s also extracurricular activities, babysitters, back-to-school shopping, family vacations and holiday spending. Managing your money responsibly is one of the most important aspects of budgeting. A family needs to always put the costs of running the household first.

Back to School and Holiday Spending

Mom shops with son

It’s important to think about other big spending events that occur annually and make sure you prepare for those in advance as well. If you know you will need to buy new clothes, shoes and school supplies for your children come fall, planning six months ahead should give you enough stashed away to afford what you need without feeling the financial pinch.

It’s the same for holiday spending. It can be really helpful to buy gifts throughout the year, if you are able to. This way when the holidays come around, you already have a stash of gifts put away and aren’t plunking down a small fortune or stressing out over not being able to get the perfect gift for your loved ones. Setting up a predetermined budget for spending also helps. This way you aren’t going overboard no matter what time of year it is.

Don’t forget vacation planning!

Once you feel everything has been budgeted and accounted for, then a family can begin budget planning for things like extracurricular activities and vacations. The average cost for a family vacation for four is anywhere between $1,798 and $4,300 depending on where you are headed and for how long, obviously. A recent study from NerdWallet had parents spending an average $2,256 on their family vacations.

That kind of expense often requires diligent saving techniques and planning in advance to make sure you are getting the most for your money. Planning a family vacation on a budget allows you to really look at all the expenses involved in going somewhere and anticipate your costs. This helps you to know how much you’ll need to save in order to take a trip to, Disney World, for example.

Taking a family vacation can be an important bonding tool for families and one that should be worked into a budget at the beginning of each year, or whenever your family modifies their budget. This is true even if your family is faced with debt.

Family Debt Management

It can be difficult managing family needs when there is debt involved. But it’s important to create a budget to prioritize your most important expenses and debts so that you can work to get out of debt. Managing debt effectively is essential so you can focus on saving for things like your children’s education and your own retirement.

Budgeting is important when looking to get your family out of debt. See where you can potentially cut back on expenses. Often, you can find ways to reduce necessary expenses, like food, to free up money for paying off debt.

Step 1: Find ways to cut back in your budget

According to the latest data from the USDA, a moderate-cost grocery plan for a family of four costs between $203.90 and $243.40 depending on the children’s ages. Monthly that could run more than $1,000 a month, and that doesn’t count eating out. Understanding something as simple as what you are buying can work wonders. Then you can consider using coupons or switching brands to help you save.

Other ways to add money to your budget if there is time in your schedule, could be picking up a second job for extra cash. If this isn’t possible, think about selling items in your home you no longer use for an extra cash bump. You can even turn a hobby like knitting or handiwork into a side business.

Step 2: Prioritize your debts for repayment

Once you have figured out how to acquire that extra cash in your budget, figure out where it should go. Will it go toward paying down old credit card debt or student loans? Or maybe you can increase the payments slightly on your credit cards and manage to wrangle a vacation out of the extra money. That way, you can avoid the added expense and interest rates of putting your vacation expenses on a credit card.

When managing family debt, it’s important to think about your needs versus wants and prioritize effectively. Sometimes debt can be overwhelming and leave you to that feeling of wanting to give up.

Thankfully there are lots of budgeting tools available, from simple methods like writing it down or using envelopes of cash, to apps and budgeting spreadsheets.

If you want to create a family budget but you’re not sure where to start, try a budget planner application. Debt.com recommends Tiller budgeting spreadsheets. Tiller allows you to automatically sync all your financial information and customize your budget.

Take your family budgeting game to the next level with Tiller! Try it free for 30 days to create fully customizable, interactive family budget worksheets that fit your needs.

Free Trial

Managing Student Loan Debt

When raising a family, it’s easy to overlook things that haven’t happened yet, like all the costs of attending college. But a family also doesn’t want to be hit with these costs, scrambling during your child’s sophomore year in order to cover the costs of a dorm room, as well as the home mortgage.

According to 2016 data from TICAS, The Institute for College Access and Success, graduates leave college with between $25,000 and more than $36,000 worth of debt, depending on the state in which they went to school. If you can manage it in your budget, try to save for your children’s education now. Even a small amount can help offset costs when it comes time to send Junior to university. This kind of forethought will come in handy down the line, helping cut expenses for parents, as well as keeping your student out of too much college debt. Applying for scholarships can also help alleviate some of the financial burden.

Teaching your children proper money habits early can help keep them out of financial straits later on in life. And remember, a good budget is only as good as the person following it. So, be smart about sticking to the plan you created for you and your family.

Article last modified on August 1, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: How to Make and Maintain a Family Budget - AMP.