Why a Family Budget will Save You Stress (and Money)

If you’re under financial strain, it can be tempting to just stick your head in the sand and hope it all sorts itself out. Unfortunately, that won’t make the bills disappear — trust me, I’ve tried it, and all it left me with was a bad hairstyle!

Here’s why a family budget will save you stress (and money!) and how to go about setting one up.

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Family Budget Tips

A family budget doesn’t have to be complicated or time-consuming. At its heart, it’s simply a clear picture of what’s coming in and what’s going out each month, so you can make decisions with your eyes open instead of crossing your fingers and hoping for the best. Once you have that picture, the small, everyday choices — takeaways, subscriptions, activities — become much easier to weigh up, because you can actually see what they cost you over a month or a year.

Why Bother with Budgeting for the Family?

Here are 4 very good reasons:

1. A family budget allows you to control your household spending so that you have enough money to pay your bills and manage your disposable income.
2. Spreading the cost of your outgoings throughout the year means you can not only plan for the inevitable bills, but also for fun stuff, like holidays and of course the future!
3. It will stop you being stressed about money. Believe me on this. Feeling on top of your money situation really helps to relieve a lot of the stress, even if you know it’s going to take you a while to work on saving.
4. Budgeting for family expenditure really does help you not to overspend and, more importantly, it lets you see exactly what you are spending your money on. By knowing where you spend money, and then being careful, you can even start saving money too.

How to Work Out a Family Budget

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You can use a spreadsheet for your family budget and check in on it each month to make sure you’re staying on track. You don’t have to use a spreadsheet — you can go old school with a pen, paper and calculator if you prefer — but tracking your expenditure somewhere is really useful, and it’s usually easier to update on a sheet.

1. First, work out how much money is coming in to the house each month. Only include regular payments, so that way anything extra is a bonus! Sift through your pay slips for the last few months and put the income into one column. This will help you work out your average household income.
2. Now work out your monthly outgoings. Include things like rent/mortgage, electricity, home heating, phone packages, car repayments, loan payments, child care, health insurance, weekly groceries and so on. Every home has different outgoings, so you’ll know best what to put in this column! Don’t forget yearly bills like TV licence, car tax and insurance — just divide them by 12 to get the monthly cost. Put these outgoings into another column.
3. Now that the essentials are taken care of, try to work out your fun costs — takeaways, going out, extra-curricular activities and so on. You know, those things that we enjoy but could probably cut back on if absolutely necessary 😉
4. Now add up the income column, if you have more than one income line, to get your total income.
5. Now add the outgoings column items together to get your total outgoings. Great!
6. Then add the real fun stuff items together!
7. When that’s done, add the outgoings and fun stuff columns together and subtract the total from your income column. If you’re still in positive numbers, you’re doing well. However, if you’ve just discovered that the total is a negative figure (like I did the first time I sat down to do this!), then it’s time to start cutting back on the fun stuff for a while.

Only you can decide where you need to cut back. If you do find you need to trim spending, look at areas where you can reduce costs. It doesn’t all have to come from the fun stuff column — switching your phone, TV or energy provider could make you some savings too. It’s worth shopping around.

Now That You Have Crunched the Family Budget Numbers…

Once you’re finished crunching the numbers, work out your new monthly budget and try to stick to it (that’s the important bit — sticking to it!). If at all possible, try to set a little extra aside in savings each month for the inconveniences that always seem to crop up just as you think you’ve got it sussed.

It might be a good idea to get the kids involved too. I know some parents don’t like to let their children know if they’re in a tight financial spot, but I find sharing a little bit of what’s happening doesn’t do any harm. Letting them know that if we go to the cinema to watch that “must see” film this weekend, it’ll be coming out of the music lessons fund helps them prioritise too, and helps them understand where money comes from and how it gets spent.

Now that you know how much you have — and haven’t — got, it’s a good idea to keep on top of it. Review your budget plan every few weeks, and if it isn’t working for you, make some changes so that it does.

Don’t be Afraid to Ask for Help if You Need It

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If you’re finding it hard to manage, or every time you think you’re making ends meet somebody moves the ends, then it might be time for some independent advice.

In Ireland, the Money Advice and Budgeting Service (MABS) offers free, impartial money management advice. Readers elsewhere can find similar support through services like Citizens Advice. If you’re struggling, do get in touch — it won’t do any harm, and chances are it will help.

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Frequently Asked Questions

Do I need to be good with numbers to budget?

Not at all. A family budget is really just adding up what comes in and what goes out. If you can use a calculator or a simple spreadsheet, you can build one.

How often should I review my family budget?

Check in every few weeks at first, then monthly once you’ve settled into a rhythm. Life changes — a new bill, a pay rise, a new activity for the kids — so it’s worth revisiting your budget rather than setting it once and forgetting it.

Should I involve my children in budgeting conversations?

Many parents find it helps to share an age-appropriate amount of information with their kids. It can help children understand trade-offs and appreciate the value of money, without needing to share every detail of the household finances.

What if my budget shows I’m spending more than I earn?

Start by looking at the “fun” spending column first, then check whether switching providers on things like phone, TV or energy could bring your outgoings down. If you’re still struggling, free, independent advice services can help you find a way forward.

Related Articles

• How to Save Money at Home in 6 Easy Steps
• 6 Tips for Teaching Children Good Money Skills

Save This for Later

Budgeting works best when you can come back to it. Bookmark this article or save it to your favourite parenting board so you’ve got the steps handy next time you sit down to go through the numbers.

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