4 steps to a family budget that works

If you want to make the most of your money, and keep track of your family spending, you need a budget.

Anyone can learn budgeting skills. As your kids get older, they can get involved with creating a family budget. Showing them the numbers and how much things cost can give a valuable lesson in money management and saving for what you want.

Step 1: What you need and what you want

Time for a family meeting to talk spending. The kids don't need to know all the exact figures of your income and expenditure, but giving them an idea of how much things cost and how to prioritise and budget is a smart budget lesson.

Start by knowing your income and your needs – the things that aren’t up for negotiation:

  • mortgage or rent payment
  • groceries
  • household bills like electricity, gas, water, rates, insurance
  • phone and internet
  • public transport and car costs
  • school fees and daycare costs
  • insurance and medical expenses.

From there, add in the ‘nice to haves’ – and be prepared for some debate from the family about what is a need and what is a want! Non-essentials to include in your budget might include:

  • eating out and takeaway food (including your takeaway coffees)
  • pay TV or streaming services
  • apps and downloads
  • gifts
  • hobbies
  • magazines and newspapers
  • holidays.

There's a couple of items that could fall into either category depending on your circumstances and values. Savings and donations to charity could be considered non-negotiable in your household – or they might not fit into your family budget right now. Saving is a positive habit to get into, even if it’s a small amount each month. Start with a small, achievable amount that won’t impact your everyday lifestyle. Giving back to others and the community is another life lesson you can create around money – if it’s not possible for your budget, look for other ways to get involved by volunteering your time to help out a charity or at a community event.

Step 2: Create the budget plan

Use a budget planning spreadsheet or app to keep track (and add everything up quickly). Look around for the format that works for you – the QBANK budget planner or MoneySmart are great places to start.

Laying out all your budget expenses helps pinpoint if you're spending more than you're earning, or if there’s some money left over you could be putting to good use.

Budgets aren’t always about going without – they're a plan for your money, not something you should dread or that makes your life harder. As well as budgeting for all your everyday costs, show the family how saving for a holiday (big or small) can be part of your plan. Being able to see that you’re swapping one spend for another can help soften the blow of reining in some spending.

You can lead by example and show the family how to compromise – you might decide to drive to work one less day a week and take public transport for a day, or to give up a magazine or online subscription you don't need. Any money you save on petrol and parking can go into the holiday fund.

Step 3: Follow through

Budgets aren’t worth much if you don’t stick to them. Keep the budget as accessible as you can so you can check in on it daily and take action. For example, if your grocery budget is getting close to the limit for the month, keep it in check by using up food from the freezer and the pantry.

Make a family habit of asking, "is that in the budget", before any significant (or unplanned) purchases. If you find you're spending more than the budgeted amount week after week on some items, take another look. You might need to rearrange your budget or change some spending habits.

Plan to redo your budget every 3-6 months, or whenever there’s a change in your income or outgoings.

Step 4: Reward the hard work

The 4th step is the most fun. Create a reward system – if the family works together to stay on budget, plan for a dinner out or top up the holiday fund. Rewarding good money management is important to remind the family that budgets are plans, not punishments.

Budgets make sense

Need help with your family budget? Check out our budget planner or talk to QBANK. Call 13 77 28.

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