Plan Your Family Budget

Family budget planning:

No matter if you are managing a huge household with a big budget or a smaller one with moderate income and spending, some kind of budgetary planning and organization is definitely needed.

Of course, there is the "intuitive" and "laissez-faire" option, which I think all of us experienced sometimes, but it can be pretty stressful 😅

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Why is it important to prepare a family budget?

As much as 80% of our financial success can depend on our activities - like planning, saving, and investing - and only the remaining 20% is directly linked to the actual knowledge about financial markets. The most important keywords to keep in mind are awareness, planning, and regularity.

If we are able to track our budget, we can also use it to reach the desired changes!

A well-developed family budget can help with setting your goals and tracking their fulfillment as well.

Steps of planning a family budget

Thinking about planning your budget as a big mysterious activity can be scary - and can easily make you postpone this activity again and again. 

So instead, let's break the whole process into 3 easy steps 😊

1. Collecting data

It is essential to start collecting data about your income and spending habits. The easiest way is to turn a sheet of paper into a family budget planner and start writing carefully all your income and expenditure in separate columns. 

After having like 2-3 months of data collected, you can review these sheets and use them a basis for planning the upcoming months.

2. Defining your goals

Budget planning is usually for 6 or 12 months, its most important objective is to make the family's financial situation more predictable. But do not think of planning as a one-time activity, you can revise and adapt the plan if your situation changes. 

Defining your goals for longer periods, and thinking about your expected income and spending will allow you time to make savings if needed - or if finding out you have some extra money, you can start thinking about its best place in due time.

A great example can be the "back to school" period in late August, or early September - which requires some additional resources for many families. If you plan higher spending for the end of summer in order to buy everything for your kids going back to school, you can predict it earlier and start saving for it in smaller amounts in the previous months.

Planning can make you aware of and be prepared for higher expenditures, while also helping to make savings and more conscious decisions.

3. Evaluation

Continue data collection every month, and do not forget to check if your plan is in line with your actual expenditures. Evaluation is essential and also allows you to make changes in your plans if needed!

What aspects to consider when planning your family budget?

• What are our fixed, recurring expenditures in each month (eg. food, overheads, daycare)
• Do we have "emergency savings" for at least 6 month
• Are there any loans, or mortgages we need to repay
• What other higher expenditures can we expect in the upcoming 6-12 months (eg. school starts, planned vacations)
• How much can we save for unexpected issues (eg. car breaks down) 
• For what goals we would like to make savings (eg. new house, kid's education)

How to arrange budget categories?

When you have in mind more or less all your expected incomes and planned expenditures, you can arrange them into a budget 😊

Some hints for the allocation:

50-30-20 budget
50% of your income should be allocated to essential expenditures (mortgages, overheads, food...),
30% to fun, and not essential ones (like clothing, theatre...),
20% to savings.

Zero-based budget

This means that your income minus your expenditures should equal zero. But does not mean that you are actually spending all your money 😀

The goal is to allocate all of your income to some category/purpose - including both what you spend and what you save.

And how you can put it all into practice and be able to stick to your budget during the days?

Envelope budget. This is how my Mother did it decades ago - but apparently, this method is still working😊 

Just label envelopes according to your planned expenditures (eg. daycare, groceries...), and at the beginning of every month put the necessary amount in each. At the end of the month what is left can go to savings - or you can reallocate it for next month... or to the "fun" envelope😊

Of course, you can use various apps as well to track your spending, or make virtual envelopes and to get some support in sticking to it during the days. It is totally up to you! Your family budget should serve you and your family in your everyday life and in the long run too 👀😁

I hope your life will become easier and more organized with these family budgeting tips! 

Feel free to use this Family Budget Planner template to start recording your incomes and bills today! 😊