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Successful Family Budgets (and How to Stick to Them!)

Katya Bowd

Posted on August 16 2017

We all know the challenge of family budgets. Half of the battle is realising that you and your spouse may not speak the same language concerning how to handle money. Successful family budgets are the result of effective communication. Think of it like an epic family road trip. Someone is going to be the primary driver while someone else holds the map (or, these days, programs the GPS). But the trip doesn’t start until you agree on a destination and the route you plan to take for getting there.

When it comes to managing your family’s funds, it has to be a team effort. Setting up a budget plan can’t be a one-man show. It’s a recipe for disaster unless both of you are on the same page. This means there is a possibility that planning your budget will open up some assumptions the two of you have about each other’s spending and saving habits and preferences. So be prepared for the opportunity to learn more about your spouse’s financial and organisational idiosyncrasies. Things you will need before you start:

  • An open mind
  • A thick skin (your spending habits are about to come under scrutiny, after all – but now is not the time to be defensive)
  • The goal of reaching a better understanding of your situation
  • Pen and paper
  • A calculator
  • Last month’s bank statement (or log in to your bank’s website)

Depending on where you are in the budgeting journey, there may be a few more things you need to find before you can begin.

If you have a working budget that just needs to be updated, this will not really apply to you. However, if you haven’t yet put a budget on paper, the initial setup is going to require some dedicated time (think one or two hours), so go ahead and make a dessert and something yummy to drink to help take the dull (or tense) edge off of this activity. Also, collect any recent bills that have come in the mail or your inbox. Why?

The first step to setting up a budget plan for your family is finding out where you are right now.

Remember our road-trip analogy? It does no good to plan a route that takes you from Italy to Austria if you’re starting in Germany. Having a destination in mind is critical, but before you map out how to get there, first you need to identify your starting point. Your budget needs to fit your life, so you need to take stock of everything that entails. Look at the month (or two) behind you and add up your expenses. This step is all about gathering the data about your current financial situation. Listing everything by category helps to simplify the process. If you utilise online banking, go through the month’s transactions and categorise expenses to make your budget a breeze to maintain in the future.

Take a moment and add up any sources of income. You may bring in the same amount every month. Write it down. You may be self-employed or work on commission. Look at several months of recorded income and find an average monthly amount that you can safely budget for the purpose of planning your spending.

Now let’s look at expenses.

The first category for which you will need to gather data is your housing. On paper, tally up what you spend monthly on your mortgage or rent, your utilities, homeowners or renters insurance, water, waste management, and other expected monthly bills related to housing.

Next, find all the expenses related to your transportation. If you have a vehicle, what is your payment on it? What is your insurance costing you? Figure out approximately what you spent on fuel last month. Do you regularly take public transportation? Go through receipts and bank statements to figure out what you spent on taxis, buses, etc. Try to get an estimate of your monthly transportation costs.

Do you have any outstanding balances on credit cards or student loans? Make a list of your minimum payments. Do you have back taxes on which you are making payments? Include those here.

For the most part, these are all that you would label “Fixed Expenses.” There are ways to save money on your utilities, transportation costs, etc. But, for now, it’s important just to know what you are currently spending on a consistent basis. If you can make use of your bank’s website to set up automatic payments for these, do it! Why wouldn’t you? It’s like having a personal assistant pay your bills for you, and it’s usually free.

For the rest of your budget, the best practice is to itemise. Absolutely. Everything. Separate your grocery purchases from what you spent eating out. Write down every subscription you have and what it’s costing you. Go through that bank statement and make sure you know exactly where your money has been going. You can create categories for your discretionary spending, such as:

  • Entertainment
  • Clothing
  • Gifts
  • Travel
  • Home improvement, landscaping, and furnishing
  • Vehicle maintenance
  • Baby care necessities
  • School supplies/sports gear for older kids


If you are setting up your budget with the goal of getting out of debt, this is going to be a tremendously helpful exercise, because you will quickly identify the best ways to save money just by looking at where your discretionary funds are going. The phrase “disposable income” is completely ridiculous because no one in their right mind intentionally throws money away. However, it may surprise you just how much is going toward superfluous subscriptions, unnecessarily expensive gifts, etc. These are the financial leaks that will quickly disappear once you have a budget on paper. This can be the hardest part of building a budget because it really forces you to look honestly at your habits. It can be uncomfortable if you have been turning a blind eye and you know you’ve been less than frugal. Fear not! Having information only empowers us to make better decisions in the future.

Finally, don’t forget to take into account regularly occurring non-monthly expenses (things like vehicle repairs and dental care). You’ll want to either set up a list prioritizing which ones occur first and create “savings milestones,” or simply put a little toward each one every month, using a savings account or envelopes for cash.

The next step is looking ahead to determine exactly where you want to be financially.

This is the fun part. Now that you’ve gone through the nitty-gritty of your spending habits and possibly located leaks, you and your family can start painting the picture of what your ideal financial situation looks like. Do you want to be debt-free? Are you saving for your epic family vacation? Maybe you want to start a college fund for your kids, or you know you’re going to need a new vehicle down the road. Regardless of what the goal is, the way to get there is to spend less than you make every month.

Whatever is motivating you to get your financial situation in order, get the whole family involved in the process. As a couple, identify what your priorities are. Let the priorities you have for your family determine where you focus your finances. But especially if you have older children, welcome their input, too. If they have ownership in the family budget as well, they will be more likely to contribute to the cause with habits like turning off the lights to save electricity and not begging for unnecessary items that aren’t in the budget. Research money-saving tips and ask them to help you find ways to implement them. Habits don’t change overnight, but if they can agree the family goal is worth the sacrifice, you will have a way to remind them that the changes in habit and lifestyle are worth it and you are more likely to see improvement.

Habits don't change overnight, but a family goal is worth the sacrifice.
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Once you have everything on paper, feel free to make use of spreadsheets, online tools or apps for keeping your budget up-to-date. Or go all-in and pull out cash to really take control of your spending by using individual envelopes for your discretionary categories (it’s the best feeling ever to see actual cash still in there at the end of the month). Whatever works best for keeping your family on track with your spending plan, get everyone on board and be consistent. The results are well with the effort!

What other successful tips have you used for setting up the family budget? Let us know in the comments below!