Creating a family budget is the first step to managing your household finances. But budgeting can seem like a lot—especially when you’ve got kids. You’re busy, your money’s tight, and money talks are sometimes super awkward.
Hear this: You can create a successful family budget no matter your time, income or past. We’ve been teaching people how do to it for over 30 years and have seen it work again and again and again. Here’s some of our best guidance and tips on how to make a family budget work for you.
A family budget is a plan for your household’s money—everything that comes in (income) and goes out (expenses). That means you’re planning ahead for all the giving, saving and spending each month—from groceries and rent to emergency savings and retirement.
First, list your income—that’s any money you plan to get during that month.
Write down each normal paycheck for you and your spouse—and don’t forget any extra money coming your way through a side hustle, garage sale or anything like that.
If you’ve got an irregular income, put the lowest estimate of what you normally make in this spot. (You can adjust the number later in the month if you make more.)
Now that you’ve planned for the money coming in, you can plan for the money going out. It’s time to list your expenses. Check your online bank account or look at your bank statement to help you estimate your expenses.
We believe in starting your budget with a spirit of generosity and giving. Also, if you don’t have an emergency fund yet, you need to make saving one of your priorities.
Then you’ll list what you spend money on. Start by covering your Four Walls—aka food, utilities, shelter and transportation.
Some of these are called fixed expenses, meaning they stay the same every month (like your mortgage or rent). Others change from month to month and are called variable expenses (like groceries).
Fixed expenses are way easier to nail down the first month. For variable expenses, look at your past spending and make your best estimate. It usually takes about three months to get the hang of this budgeting thing, so don’t worry if it’s hard to figure out your spending at first. You’ll get better at planning the more you budget.
Next, list all your other monthly expenses. We’re talking about insurance, debt, childcare, entertainment, restaurants, pet costs, and any personal spending. And remember, needs come before wants. Always. So get those essentials in before the extras.
When you subtract your expenses from your income, it should equal zero. We call this a zero-based budget. That doesn’t mean your bank account is at zero (keep a little buffer of $100–300 in there). But it does mean every bit of your income has a job.
If you end up with money left over after you’ve subtracted all your expenses, give those dollars a job too. Otherwise, you’ll end up mindlessly spending them on coffees and those one-click deals of the day. Put anything “extra” toward your current money goal—something we’ll talk about more in a bit.
What if you end up with a negative number? It happens. You just need to cut your planned spending until your income minus your expenses equals zero. Hint: Start with extras like restaurants and entertainment. You can’t spend more than you make. That math doesn’t add up. Literally.
Remember, you work hard for your money. It should work hard for you. Every single dollar. So make a zero-based budget. Every single month.
Every time you spend or make money, you need to track it in the budget. That’s how you keep an eye on your spending—so you don’t risk overspending.
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Also, tracking your spending creates accountability with your spouse. And yourself.
Yup. Sometimes you’re the exact person who needs to look at that restaurant budget line and see it’s just too low to hit up the Fry Guys food truck for lunch with your coworkers. (Did someone say “brown-bag your lunch” just then? We did. It was us.)
The first three steps are all about making your family budget. This step is the secret to keeping up with it. Don’t skip it. Track those expenses!
Your family budget won’t change a ton from month to month, but it will a little. You’ll have holidays, birthdays, annual subscriptions. You’ll also have to cover marching band uniforms one month and buy new soccer cleats the next.
Don’t let any of it surprise you! Copy over last month’s budget, and then make the tweaks you need to get prepped for all the seasonal and month-specific spending coming your way. And do this before the month begins because planning ahead is how you’ll get ahead with your money.
Enter your income and the calculator will show the national averages for most budget categories as a starting point. A few of these are recommendations (like giving). Most just reflect average spending (like debt). Don't have debt? Yay! Move that money to your current money goal.
