Top 10 Practical Tips For Your Family Budget
When my oldest daughter was born, our budget was tight. We used every cent to provide for our needs, and there was little to no extra for the wants. My husband at the time worked hard so I could stay home with our daughter, we lived in an 800-square-foot condo, but we made our financial situation work. Why? Because we created a budget, stuck with it, and communicated regularly with each other.
Eleven years, a second child, and a home renovation later, I have learned so much more about having a practical and effective budget. What is key to sticking with a budget? It is not just about math. It is about aligning your family values, life goals, wants, and needs with your income. When you are able to align your budget with your life it can help you have more realistic expectations and drastically reduce your financial stress.
Here are The Steps to Creating a Family Budget
Calculate and write down your total monthly income.
Calculate and write down the costs of your basic needs which include: housing, utilities, food, transportation, clothing, education/childcare, and health care/medication. (Needs)
Calculate and write down other expenses that may include entertainment/hobbies, insurance, savings/emergency funds, health and fitness, home and car maintenance, and donations. (Wants)
Calculate and write down your monthly debt payments.
Add numbers two through four together (expenses) and subtract from number one (income).
If your income is not enough to cover your expenses calculated from numbers two to four, then you will have to reduce expenses in number three (wants) or find a way to increase your income in number one to balance your budget.
Top 10 Practical Budget Tips
Set goals but focus on intentions:
Goals focus on a future outcome, which you cannot always predict. Intentions give you clear direction in each moment of each day. Focusing on intentions is far more effective when it comes to sticking with a budget so you can reach your potential goals. For example, I have a goal to save $1,000 for my vacation in eight months. My intention is to only spend my money on budgeted expenses. Your intention helps you get to your goal or vision.
Track your expenses.
Tracking your spending is the only way you will know if your budget is effective or not. This means once a week to once a month, sit down and write in a column beside your budgeted amount how much you actually spent. If the two numbers are not lining up, make adjustments to your budget and/or your spending. (Below we will share expense trackers, budget apps and free budget templates.)
A quick note: the spending amount does not have to be exactly the same as budgeted but aim to have your spending slightly lower than what’s budgeted. You can do this by budgeting a rounded-up number from your average monthly expense. For example, over the course of three months my electric bill averaged $112 (to calculate the average, add the three monthly electric bills and divide by three). I therefore rounded the number up to $115 as my monthly budgeted amount for electric.
Our FREE Budget Planner with help you set your goals, track your expenses and manage your overall budget. It includes monthly budget templates, expense tracker spreadsheets and more. (images)
Plan for emergencies.
Life never goes exactly as planned, and this can be applied to your budget as well. Setting money aside to either go into your savings or into an emergency fund adds extra security when (not if) an emergency does happen in your life.
Budget for NON-monthly expenses.
Some expenses do not come on regularly intervals or may only happen every three to six months. Still, include them in your monthly budget so you have the money when you need it. For example, my car insurance of $300 is due every six months. Every month I put aside $50 for car insurance.
Use technology.
Nowadays most of our money is spent through credit cards which can be harder to track when using pen-and-paper budgets. Intuit Mint budget app is the one I use, and I highly recommend it for those who want to streamline their budget with their spending habits. Other popular budget websites and apps include: YNAB, Goodbudget, Everydollar, Empower Personal Wealth, and PocketGuard. (see below for links)
Your budget should reflect your goals and intentions as mentioned in #1.
Now this may seem like a no-brainer, but sometimes we just need a reminder. If your goal or intention is, for example, to save money, then your budget should help you achieve that goal. This means your budget, if followed, should maximize the amount you want to save each month. Your wants in your budget—like entertainment, clothes, and vacation—may be lower to accommodate saving money.
Communicate with your partner and family.
Communicating about the budget goals and tracking expenses is key to everyone being on the same page and making the family budget a success. Set up weekly meetings with your partner to go over the budget. If you have kids 10 years or older include a discussion of the budget in your family meetings once a month. In the meeting you can address your child’s questions about things they may want, how that fits into your current budget, and problem-solve to make sure everyone is feeling heard about their wants.
Understand your weaknesses.
Understanding your weakness with your spending will help you have realistic expectations and give you an opportunity to plan for possible problems. For example, if you tend to overspend when you shop at Costco, then come up with a plan. You could simply stop shopping there, go less frequently, or go with someone to help you stay on track. When or if you go to Costco, have a list of items that you are buying and stick to it.
Pay yourself first.
When you get your paycheck pay yourself first then pay your bills. This guarantees you are saving the money you want to save. Whatever you have leftover is your new adjusted income for all of your bills. This is a key element to saving money.
If you can’t afford it, don’t buy it!
To avoid creating unnecessary debt, especially credit card debt, follow this rule. When you don’t have the available funds in the moment, you shouldn’t buy it. Instead wait and save. When you have the money, then purchase it. This takes patience, self-control and self-discipline. A few tips: remind yourself of your goal, stay away from websites and stores you are more tempted to make purchases, and set realistic budget goals that are achievable.
Now, even though the intention is to stick to a budget, life sometimes throws us unexpected situations like injury, job loss, and home repairs that cost us more money than we budgeted. The good news is that your budget is flexible and can be adjusted. You may have to make temporary sacrifices, find a new source of income, or ask for help. This is okay. Most of us have been in a difficult financial situation at some point in our lives. This is what friends, family, neighbors, and community are for: to help support each other when there is a need. Help may be in the form of free childcare from a neighbor, selling handmade items you make as a hobby, going to the local food pantry, setting a crowdfunding campaign, or temporarily canceling streaming services like Netflix. Be creative, and remember the hard times are temporary.
If you are on a financial upswing, you may want to adjust your budget to include donating to certain causes and sharing some of your good fortune and wealth. Regardless of your financial situation, a family budget will help you maximize your income to live the family life you want to live.
Budget Resources
Free Household Budget Templates, Spreadsheets and Planners
Our Free 19-Page Complete Budget Planner with Cover by My Team Tangerine
Free and Simple Budget Templates, Planners and Spreadsheets by Bobbi Printables
Free Budget Planner by A to Zen Life
Free 6 Monthly Budget Planners by Everyday Chaos and Calm
Budget Planner or Expense Tracker Apps
Intuit Mint: Free to use; you can link accounts; helps you to categorize and organize your budget.
YNAB: Free for 34 days then it is $99 a year; you can link accounts; zero-based budgeting that helps you with accountability for all of your spending.
Goodbudget: Free to use; you manually add transactions and accounts; uses the envelope system.
Everydollar: Free version to use; you manually add transactions and accounts (unless you pay $79.99/year for premium version); zero-based budgeting.
Empower Personal Wealth: Free to use; you can link accounts; helps you to categorize and organize your budget.
PocketGuard; Free version to use (user limitations); the Plus version is $34.99/year; with Plus you can link accounts; set savings goals, categorize your budget and track expenses.
RocketMoney: Free to use; you can link accounts; set savings goals and categorize your budget.
Books on Home Management and Budgets
Money Honey by Rachel Richards
Rachel Richards, a former financial advisor, makes reading about your finances and budget easy. She provides practical strategies and her 7-step guide for getting your finances back in order. She also answers common financial questions to make this a well-rounded read for anyone needing budget advice.
Rich Dad Poor Dad by Robert T. Kiyosaki
Author and investor, Robert T. Kiyoskai, challenges conventional ways to think about finances. He discusses varying mindsets between socioeconomic classes- the rich and the poor - in a way no one else has done. In this bestselling book, he provides solid financial advice and money strategies that you can also share and teach to your children.
The 7 Habits of Highly Effective Families by Steven R. Covey
International bestselling author, Steven R. Covey, provides not only practical advice for parents and families, but lots of anecdotes from ordinary people just like you. This book provides a life philosophy that in turn you can apply to your budget and finances.
You Need A Budget by Jesse Mecham
Jesse Mecham in this book guides you through a proven methodology for your budget that will help you spend and save more effectively. This method has been used by thousands of people. The book practical tips along with this straight-forward steps for budgeting.
Smart Money, Smart Kids by Dave Ramsey and Rachel Cruz
Dave Ramsey a renowned author and financial expert teams up with his daughter Rachel Cruz to write a book about teaching children about finances and managing money. They share personal stories as well as help practical tips about budget, debt-free living and more.
Helpful Budget Videos
“Accountant Explains: Money Habits Keeping You Poor” by Nischa
“How to Budget + Get Out of Debt (The Simple Way)” by Jordan Page, FunCheapOrFree
“12 Things To Do Different with Money in 2023 with Dave Ramsey” by Rachel Cruze
“The Budgeting Method that Changed My Life” by The Budget Mom
“BBP Real Life Budget: Budgeting When You Don’t Make Enough” by The Budget Mom
“No Buy Year Completed! - (Buying Nothing for a Year Was Life Changing!)” by Kristy Kirby
More Budget Resources
Clever Girl Finance is a website that offers financial articles, podcasts, and coaching for anyone needing a bit of financial help.
Family Budget Expert shares professional financial advice specifically as it relates to parents and families.