Family Budgeting

This year has been financially tricky for many and even if it hasn’t impacted your family I will bet that you have been thinking more about the what ifs? What if you couldn’t work for a while? What if you were made redundant or furloughed? One way that you can help prepare for the unknown and for that rainy day is through family budgeting and ultimately saving.

What is a family budget?

A family budget is pretty much just a record of what you earn and what you typically spend. It is a way of controlling what you spend through thinking about it in advance and planning not just for your regular spend, but also for saving and any emergency contingency that might be needed.

Why is family budgeting important?

Budgeting and living within your means are important for any family, but if you are a large family, like we are, then it is perhaps even more important to know what you are spending and what is coming up as even the weekly shop can become huge if you don’t take care and if 4 kids suddenly need school shoes and this hasn’t been accounted for it definitely adds up and impacts that month.

Having a family budget takes the guess work out and allows you to spend time enjoying being a family as you know when you are out doing something you can afford it. It isn’t necessarily a fun process doing the family budget though – I won’t lie, but you will see as you read on that I have found some great tools that help.

Why you need a family budget:

As a family we have found going through the exercise of looking what we are spending our money on each month allows us to be less reactive. Looking at what we have spent in previous months informs our future planning and spending. We can see where we overspent and whilst it doesn’t always make for pleasant reading it is informative for sure!

One of the things we do now as a result of our budgeting is set aside money each month for big expenses that we know are coming like the annual car insurance payment or perhaps the children’s activities rather than simply waiting for bills to come in. This is known as having sinking funds and they can be a really useful way of preventing overspend and the need to use credit cards as you are preplanning the expense. Sinking funds aren’t hard to set up – you can even keep the money in cash in separate pots or there are bank accounts that allow you to have separate pots for different items. I found loads of useful advice about setting up and running sinking funds on the Mini Millionaire site.

We have been shocked when we have done it before by the amount we spend on takeaway coffees! Having a family budget can also help to see quick wins like having less coffee or doing your shopping at a different supermarket that can make a difference to the amount that you are spending as a family each month.

Where do you even start with doing a family budget?

This is the question that I struggled with when thinking about doing a family budget. How do you what to include and if you are trying to reduce expenditure what should you cut? Well the basic rule of thumb is split your expenses into the things you have to spend money on like food and bills and the things you want, but don’t actually need to survive. It is these ‘non essentials’ that can be cut if you are trying to reduce your spend or that you can maybe try to save up for.

Even with this guidance I have to admit that preparing a family budget is tricky. I mean shoes are essentials right… but the question is how many?

Anyway this is where I really think that some of the online tools for family budget planning can come really handy. There are a couple of tools online that I have used and have found very helpful.

The first is on the UK government’s Money Advice Service . This tool is straight forward to use and the site has loads of useful information and advice regarding managing your money.

The second one I really like is on Pigly and is in their section on budgets

I like this one as it includes load of really practical tips. There is the planner that works on the basis of a 50/30/20 split across needs, wants and savings. I love this concept it is so easy to understand and to apply across your family budget. What I appreciate about this budgeting tool is that it offers a lot of sensible and down to earth advice and accepts that just because you are doing a family budget doesn’t mean that you don’t deserve some of your wants. I find the budget planner in Pigly to be very easy to use and to be realistic and found the tips on saving and ways to approach money and spending so interesting.

How can a family save money?

In these tricky times, we, like many other families have been thinking about how we are spending our money. The first step with saving money as a family is, I think, having the conversations which is where family budgeting comes into play.

Our family conversations have given us some easy ways that a family can save money. So here are 10 ways that we have found we are able to save some pennies:

Find ways to have fun at home and in the local area rather than doing expensive day trips
Make your own coffee and take a flask with you rather than buying take out coffees
Make sure that you are setting aside money each month for the big ticket items like holidays, car insurance etc…
Plan ahead for big annual events like birthdays and Christmas
Keep kid’s birthdays simple (if lockdown has taught us anything it is that kids just don’t need that massive party to have a great birthday)
Instead of getting a takeaway make a ‘fakeaway’ at home and if you really don’t want to cook supermarkets do their own versions of some takeaway classics. Sure it isn’t quite the same, but if you need to save it is an easy way to make a change
Be less wasteful with clothing for example if jeans get too short, but still fit round the waist cut them into shorts
Keep an eye on food expenditure and make sure you are only buying what you need
Get meal planning so you are wasting less food and batch cooking can also help reduce food waste and so unnecessary expense
Talk about budgeting and saving with your kids – teaching kids about finance isn’t just good for helping support the family saving efforts, but it can also set them up for their future. I noticed on Pigly they have some fantastic advice about how to teach kids about savings which could be really helpful for these conversations.

https://www.fca.org.uk/consumers

The Financial Conduct Authority has some really useful information about support you can get during the pandemic in the UK

https://www.moneysavingexpert.com/

This site is packed full of hints and tips for saving money along with practical advice for all matters financial.

https://pigly.com/budget/brown-bag-savings.php

Pigly is a consumer focused site full of awesome calculators and planners all free to use. Some of the tools are a quite US market focused, but there is still tonnes of stuff that I know those of you not in the USA will find useful. My favourite calculator on there is the lunch savings calculator. You can actually work out how much you can save across the week, month or your career by taking your own lunch to work. With everyone working from home that has got to make a few people smile!

Family budgeting is, in my opinion, not something you want to leave until your are in a difficult financial situation. I hope that this post helps you get started with your family budgeting and that some of the sites I have found helpful when looking at my family’s budget and spend will also be useful for you.