How to Create a Realistic Family Budget That Works for Your Family

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Without a budget, you’re not in control of your family’s finances, and they can quickly spiral out of control. Many families don’t realise how much they are spending. Creating a realistic family budget is empowering and will help you to take care of your family both now and in the future. 

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There are many ways to budget, and you must choose a realistic method that works for your family. If terms like the 50-30-20 rule or family budgeting templates are new to you, this guide will help explain how to get started with family budgeting.   

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We’ll cover:

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●  Why is budgeting important for a family?

●  How to create a realistic family budget?

●  Family budget template

●  Family budgeting tips

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Why is budgeting important for a family?

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Budgeting is important for families as it creates financial stability. When you follow a budget, you give your family financial freedom and peace of mind. You’ll know exactly how much income you have so you can prioritise where you spend it and make sure all your essential payments are made. This will reduce the stress and worry caused by financial uncertainty. 

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A family budget will make every family member accountable for their spending. It will clearly show where the household money is going each month. By tracking and budgeting your money, you grow your emergency fund, build your savings, and put your family in a strong long-term financial position. 

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How to create a realistic family budget?

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Your realistic family budget should be just that. Realistic. You need to be 100% honest about your income and spending habits so that the budget is accurate. Here are some tips to help you create a realistic family budget:

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Track your income and expenses

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Here is a basic way to track your income and expenses in three easy steps:

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1. Use a budgeting template to list all your household income (Full/Part-time jobs, Benefits, Allowances, Side-hustles, Self-employment).

2. Add up all your expenses for a typical month.

3. Your income minus your expenses will show you how much you have left over to split between non-essential monthly payments. The amount left over will show whether you are living above or below your means.

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Define your family’s financial goals

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What are your family’s financial goals? Maybe you want to save for a holiday, pay off debt, or move to a larger home. Whatever it is, a budget can help you get there. A budget helps to create a path to your financial destination. Our savings jars help you visualise your financial goals and see how you’re getting closer to your goal each month.

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Adjust your spending to align with your goals

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You can focus on your goals when you’ve mastered your family budget. This could be for a wedding, holiday, new car, or to pay off existing debt quicker. You’ll see areas where you could cut back or spend smarter to save more. You can bring your budget in line with your goals.

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Plan for unexpected expenses

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Life happens. This means there could be unexpected expenses around every corner. Your emergency fund is there to use for one-off large bills such as a new boiler, car repairs or medical costs. Everyone should have an emergency fund to cover any unexpected costs so you don’t have to use your savings or get into debt.

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Review and adjust your budget regularly

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Your goals, financial situation, and income can change quickly. That’s why reviewing and adjusting your budget regularly is important to ensure it’s still relevant and useful.

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Family budget template

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Starting a family budget can be overwhelming; that’s why we recommend downloading a family budgeting template to help you get started. You’re busy with family life; we get it. But a family budgeting spreadsheet is so easy to use. 

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You can read our helpful article about budgeting to point you in the right direction.

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How to use a budgeting spreadsheet?

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A family budgeting spreadsheet is available to everyone. Simply enter the information into the template online, print it off, and stick it on the fridge so everyone can see it. 

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·   Add your income and outgoings into the template

·   See how much you’re spending in each area

·   Feel free to add or remove any of the budget lines, so it is tailored to your lifestyle

·   The budget needs to be realistic and work for you

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In this episode of A Series of Fortunate Events, created by the MoneyMedicsUK,  Ashleigh, a digital marketer, opens up about some of the financial challenges and life-altering decisions that come with starting a family:

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Family budgeting tips

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Budgeting as a family can be tough, especially if you have never done it before or are used to living a certain way. Budgeting will not only give you financial stability, but it can also help you save money too. When you’re aware of how much you’re spending, you can see where you could save money by:

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·   Using vouchers or coupons

·   Reducing monthly subscriptions or streaming services

·   Switching to unbranded food products

·   Reuse rather than recycle

·   Negotiating better prices with service providers

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If you don’t know where to start, here are some tips to help your family budget like a boss and save money in the process too:

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Get the whole family involved

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Everyone should be involved in the budgeting process especially if they contribute to the household financially. It will make children realise how much things cost and give them an understanding of how to spend responsibly. If you have young kids in the house, introduce them to the basics of budgeting early, so they have a positive view of budgeting from an early age.

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Plan for presents or events in advance

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Put a little money aside each month, so you aren’t left short when birthdays or special events come around. These dates are set, so you know when you’re going to need a little extra.

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Research free events

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To save on entertainment costs, you can look for free or discounted events in your area. This can help you save on movie tickets, concerts, and more. The long summer holidays make this tip extra useful.

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Look for family plans

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Some providers offer family plans for services such as mobile phones, subscription services, gym memberships and insurance. Family plans often work out cheaper than paying individually and can help you save money on your monthly bills.

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Get your kids involved in free or low-cost extracurricular activities

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Hobbies for kids are great, but some can be very expensive to pursue. Schools often offer after-school clubs or activities that are free or low-cost. Check out your local leisure centre to see what they have going on too. There is usually free swim time during the week.

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Use public transport

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Consider using public transport instead of your car. Fuel is very expensive these days, and running costs are increasing too. The train, tram or bus services are readily available across the UK; kids often travel free.

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Wants vs Needs

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Have a chat with your family about what is important to them. Firstly, you must budget for essential payments, including your rent or mortgage, bills, food, debt payments, and transport. The rest of your income should then be split between the non-essential household or lifestyle costs and savings. Are there things that you could live without? Ask your family to prioritise what is important and agree or compromise to create a balanced budget that works for your family.

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Plan your meals

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Planning your meals for the week can help reduce your food bill. This way, you will only buy exactly what you need. When you have a pre-made food schedule, you will be less likely to overspend at the supermarket or order a takeaway.

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Make your own snacks

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You can make your own food, snacks, and meals rather than buying pre-packaged food or eating out at restaurants. A picnic in the park is a great example of a way to save money on food and activities.

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It can be scary to start budgeting but don’t put it off. Our savings jars let you visualise your money and stay in control of your spending when you divide your budget between Jars. It will become second nature when you are comfortable with the format and tracking each cost. Once you have established your family budget using a template, you’ll be budgeting like a boss in no time.

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