Creating a Family Budget (That You'll Actually Stick To)

Creating a budget for your family is one of the most helpful things you can do to organize your personal finances. Visualizing and writing down where your money goes every month can help you identify areas you want to improve or cut back on. As important as it is to create some sort of budget, many people find it hard to set aside time. It doesn’t need to cover every minor detail of your life, but it should be thorough enough for you to follow and hold yourself to a realistic spending standard. If you’re struggling to make a personal budget for your family , here are some ideas to start yourself on a sound financial path.

Where to Start

Starting is often the hardest part since it requires effort upfront. To make a budget, you’ll need to know your household income after taxes and anything else (retirement account savings, like 401k) is taken out. This is the base of your budget. If you keep old receipts from recent purchases , bring those too so you can organize them into categories later. Choose where you’re going to keep your budget . Do you prefer making a ledger, using spreadsheet software, or some other electronic budgeting service? Once you decide on a medium, make sure you have easy access to it so you can monitor your progress. Also, consider what the purpose of your budget is . For many, simply having one is reason enough. Other people may have a larger goal in mind, like buying a new house or other major purchase. Once you have this organized, it’ll be easier to craft your budget.

Making the Budget

A good rule-of-thumb to start with is the 80/20 rule . In simple terms, you should live off 80% of your take-home pay and save the remaining 20% into retirement accounts, investment accounts, emergency funds, or other long-term vehicles. If that’s currently not the case for your household, don’t panic; this is why you’re making a budget.

The first things you should account for are large debts. These include your mortgage, car payments, student loans, and ideally, any outstanding credit card debt you may have. These act as an anchor to your budget since you must meet these obligations every month. After you’ve accounted for the big claims on your cash, move into the other necessities, like groceries, gas, and utility bills. Make sure you’re identifying actual necessities–a new wardrobe or shiny cell phone aren’t necessities. You’ll be able to make small adjustments here. Maybe you don’t need the most comprehensive car insurance package, so you opt for a change to cheap auto insurance , or you find a better alternative to your utility provider.

The final piece of your budget is discretionary spending. This is where most budgets start to fall apart. Sticking to a budget, and not simply estimating expenses, is what trips households up. For this reason, experts recommend creating categories for your discretionary spending . If you have those old receipts, look where they’re from and file them appropriately. You will have the most control and flexibility in changing these expenses once you know how and where your family spends money.

Reviewing Your Budget

The best budgets are rigid enough so you can stick to them, but flexible enough that it doesn’t feel like you don’t have the freedom to do other things you want. Ideally, you have a little more than 20% of your income to save in some months, which allows for slight fluctuations in your spending. You are also not committing to one budget for the rest of your life. Revisit your budget every couple of months to see your progress; it’ll build in consistency and stabilize your spending habits .

Building a budget for your family might seem like a nuisance, but after some initial time spent, the process becomes a habit rather than a chore and you’ll feel more in control of your finances once after understanding your family’s needs and wants.