How to Create a Family Budget (and Stick to it!)

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If the idea of budgeting makes you groan, you’re not alone.

But with the cost of living rising and wages at a plateau, can you and your family really afford to not be smarter with your money? When you have children who are masters of ‘pester power’ and a seemingly never ending pile of bills, anything that can help you make your money go further is a blessing.

Here, we’re going to show you a simple 8 step plan to creating a family budget. And then, we’re going to share with you our top tips for sticking to it:

  1. Work out your total monthly income. This is the total both you and your partner bring home every month, after tax. This is the exact amount you have to play with each month.

  2. Calculate fixed expenses. How much do your mortgage or rent, insurance, and other fixed costs come to each month? These are the outgoings that never change in amount, and have to be paid every month.

  3. Calculate variable expenses. These outgoings will be bills, groceries, commuting costs and more. Estimate these to $10 but be sure to give yourself room to spare.

  4. Add in everything else. This is where you calculate how much you spend on eating out, hobbies, and other recreational costs every month. Again, be honest and calculate to the nearest $10.

  5. Fill in the gaps. Check through your bank statements and receipts to see what expenses you’ve left out and factor these in. For things like vacations, birthday presents, and repairs, calculate an annual cost and divide by 12. This is the money you should save each month to cover the costs.

  6. Work out your totals. Add all of your expenses up and subtract from your income. This will show you exactly how much you’re left with – or not left with depending on your circumstances – at the end of the month.

  7. Make the necessary cuts. If you come up short or are shocked at how little you have left, it’s time to create a new budget. See where you can lower your variable expenses, cut out luxuries, and other expenses and create a new budget to follow.

  8. Write a new spending plan. Using all this information, create a new budget for your family. Track and monitor your progress, and make the necessary changes to save even more cash. Update your budget every month until you’re able to live comfortably, but still within your means.

The hard part though, as many families find, is sticking to this budget. But we can cover that too. Here are our top five tips to help you stick to your newly created budget, and make the most of the cash at your disposal:

1. Plan your spending on a weekly basis

Early on especially, it can be really challenging to maintain a reasonable budget for an entire month. It is also hard to tell if it is really working. Instead, budget on a weekly basis and make any changes as you go along. This will help you stay on target for the month, but breaks down your target into manageable chunks.

2. Deal in cash only

It can be easy to overspend on a credit or debit card, and blow your budget without realizing. To help you stick to your budget, withdraw your weekly spending money in cash and leave your cards at home. You’ll be much more frugal this way as when the cash is gone, it’s gone.

3. Don’t give in to pester power

Any parent that has ever shopped with their children will know how quickly their groceries bill spirals out of control. To avoid arguments and confrontations with pester power; leave the kids at home when you shop.

4. Account for every penny

If you’re going to stick to a budget, you’ve got to be honest with yourself and account for every penny. Tally up your spending at the end of every week and see where you’ve thrown money away. This will help you make improvements the next week.

5. Avoid online temptation

You might think that shopping online will help you stick to your budget, but it’s actually the easiest way to blow it. Why pay for shipping, when you could pick it up yourself for example? When buying food, it is also really tempting to add additional items. Avoid buying online altogether, and you’ll find it much easier to budget better.

So there you have it. Our top tips for creating – and sticking to – a family budget. No one wants to feel like their financial worries prevent them from doing the things they want to. By budgeting better and learning to manage your money, you can get some of that financial freedom back.

Clare writes for Core Assets which is the leading children’s service provider for fostering in the UK as well as operating globally.

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