What to include in your family budget

5 min read

Being an adult comes with all kinds of financial responsibilities, and if you have kids, costs quickly begin to add up. With the monthly mortgage or rent payments, groceries, and after-school activities, it can be tough to find opportunities for saving.

Nevertheless, we could all stand to save a little, whether for a rainy day, a nice vacation, or a college fund. That’s why it’s a good idea to create a family budget to give you a broad overview of your expenses and spot opportunities for saving. To help you get started, we’ve compiled some tips and tricks for creating a family budget. 

Why you need a family budget

The purpose of a family budget is to help you stay in control of your expenses and avoid overspending where possible. It also supports saving goals, so you can put away money for any plans you have down the line. 

The goal of a family budget isn’t to constrain you—it’s about empowering you to spend in a way that makes you feel confident and in control. Plus, budgeting lets you model good money values for kids early on, teaching them healthy financial habits for the future. Want to learn more about how to teach fiscal responsibility to children? Check out our article on teaching kids about money here. 

How to budget with a partner

Things to consider when creating your family budget

There are lots of things to reflect on when creating a family budget. Here’s a list of what to consider:

  • Set expenses versus variable expenses: Each month there will be fixed expenses, such as a mortgage, rent, or insurance. Other expenses, such as utility bills and grocery shopping may vary. Recognizing the different kinds of expenses that you have each month will help you get a better estimate of what should be in your budget

  • Loan and debt repayments: If you have high-interest debts to repay, such as credit card or business loan payments, it’s a good idea to work out the best way to pay them off while maintaining your credit rating.

  • Savings targets: As a family, decide what you would like to achieve with your savings. This could be a weekend away together, contributing to a college fund, or investing in a new car.

How to create a family budget in 5 steps

With a little math and motivation, creating a family budget shouldn’t be too complicated. Get started with these 5 simple steps:

1. Calculate your family income

The first step is adding up how much you and any other family members bring in each month. Look at both the reliable fixed income you can always count on, plus any extra earnings from things like freelance work.

2. Note down your monthly costs

Write down a list of your family’s monthly spending, including your needs and your wants, keeping in mind that these will be different for every family. Your needs will likely include housing costs, childcare, food costs, health insurance, transportation costs or car payments, utilities, and internet/phone fees. Your wants are extras that you’d rather not go without. This could include frequent dinners out, new clothes, or trips to the cinema. 

3. Evaluate the net income

By subtracting your monthly costs from your income, you’ll arrive at what we call your net income. Is there any money left over? If so, these funds can be put towards savings or any debts to be paid off.

4. Decide a savings strategy

Once you know what’s left over each month, decide on a savings strategy for the extra funds. Here, there’s no right or wrong—maybe you want to put money away for retirement or a downpayment on a house? Perhaps you want to save up for a family holiday or a blow-out birthday party for your child. The important thing is that you feel in control of your finances and what’s happening on your account each month.

5. Review and streamline 

Now that you have a clear overview of your income, spending, and goals, it’s time to set your budget. You may want to review what costs can be cut to optimize your saving goals. If so, here are some suggestions on where to streamline:

Food Budgeting for food requires a little planning, but it can be empowering—and fun. By planning meals ahead, you can minimize your grocery shopping trips and avoid overspending. Try new recipes, and involve your kids in cooking and menu planning. Where possible, buying items in bulk not only saves money, it also helps you reduce waste. You can also check what grocery stores have special deals and plan meals around them. Of course, you should still eat out when it suits you, but try and save it for special occasions or when you’re craving something that you can’t easily prepare yourself.
Utilities and service providers Operating a home costs money and energy. If you’re looking to save, try lowering the heating at night, taking shorter showers, and making sure to turn off the lights when you leave a room. This will reduce your utility bills and your carbon footprint. Compare providers to make sure you’re getting the best deal for internet and phone service, and assess whether the plans you have are really serving your needs.
Shopping Shopping has lots of benefits, from treating yourself or your family to supporting local businesses. However, when you’re budgeting, it’s good to consider what will really make you happy vs. what you’re buying on impulse. Try upcycling old clothes, shopping for used items, or doing a clothing swap with friends, especially for growing kids. Avoiding shopping when possible will mean less clutter around the house and more money to spare later on.
Transport and Car From trips to school, work, or grandma’s house, we all need to get from here to there. If you’re looking to save on transportation, try walking or cycling to work for some free exercise. If that’s not an option, try carpooling or buying a monthly train pass. If you’re in the market for a new car, try something that’s fuel efficient or even electric to save on gas.
Fitness and Health Staying fit is essential to a healthy life, and many find that gym memberships or exercise classes help them stay motivated. If that’s you, great, keep it up! But if you find that your gym membership is going to waste each month, cancel it and take up jogging or power-walking instead. If group exercise motivates you, find a running partner or organize regular trips to the outdoor swimming pool.
Entertainment Family adventures are a great way to entertain your kids. Check out free activities to do in your area, such as parks, lakes, or festivals. Cancel streaming subscriptions that you don’t use and opt for the occasional movie instead.
Insurance When it comes to insurance, it’s important to educate yourself on what you need should something happen. Shop around for the best policies out there using comparison sites. Look into rollover policies and make sure you remove any unnecessary coverage costs.
Vacations The kinds of vacations we take may vary based on our budget, tastes, and time off. If you’re looking to save, consider a break close to home that you can reach by car or train. Try staying in a rental flat vs. a hotel. Or, if you’re looking to splurge on a fancy getaway, save up for it by cutting costs elsewhere so you can plan a trip to remember.

Resources for online family budget estimators

With technology at our fingertips, creating a family budget with digital tools is quicker and easier than ever. Take charge of your spending with these top tools:

  • Family budget calculators: EPI’s calculator is a great resource to swiftly calculate costs for your family online, with estimates given based on US economics. Calculated via a cross section of 10 family types (up to four-children families), the results given are based on a modest lifestyle. Open the EPI Family Budget Calculator here to see how potential costs come out for your family budget.

  • Budgeting apps and tools: Handy apps can simplify your expenses instantly by recording every family cost and household spending with transparency. Try a bank where you can receive push-notifications after every transaction, and set up regular transfers, or track and get insights on spending in certain categories. This will empower you to achieve your financial goals, no matter what they are. Tip: Check out our top budgeting apps to support your family budget.


Your money at N26

Whether your family is small or large, organizing a budget can be managed easily with N26. Open a premium account now to try N26 Spaces, where you can create up to 10 sub-accounts to support your saving goals. Use Rules to arrange automatic transfers to a space, or save with other family members using Shared Spaces, which enables N26 customers to share a sub-account to achieve their financial goals together.

Which expenses should you consider when creating a family budget?

When thinking about the family expenses and budgeting, it’s important to include all your expenses—the essentials and the fun stuff. Essentials include housing payments, groceries, utility bills, cell phone and internet costs, transportation and car costs, childcare expenses, health and other insurance costs, and taxes. Don’t forget additional treats, including eating out, shopping, and family vacations.

How do you begin with creating a family budget?

First, you’ll need to determine your household income, so that you know what’s coming in each month. Next, subtract your fixed costs, such as housing payments, transportation costs, and insurance policies. Then, calculate your variable costs, such as dining out and shopping, and subtract the costs from your income to figure out what’s left over each month and where savings are possible. Finally, figure out what your saving targets are and consider paying off any outstanding debt.

Why should you have a family budget?

By implementing a family budget, you can keep a consistent eye on your collective spending. Budgets are great when you’re looking to cut costs or save for the future. It can also shed light on spending habits that you may want to change and empower you to spend and save with confidence. Finally, it’s important that everyone in your family is on the same page when budgeting, so that you’re all working towards the same goals.

Should you share your family budget with your kids?

Modeling healthy spending habits and teaching the children about the concept of money early on is always a good idea. Kids can cultivate an understanding of money and its values from a young age, so it can be fun and rewarding to show them how to budget. Want to learn more about talking to kids about money? Check out our blog post on the topic.

How should I divide up my family budget?

There are lots of different strategies for dividing up your budget, depending on your income, expenses, and many other factors. One thing to try is the 50/30/20 percentage rule. Here, 50% goes towards your necessities, 30% towards leisure and fun, and 20% towards savings. However, this is just one example of how to organize your money. After all, finances are personal, and it’s important to organize your family budget in a way that works for you and your family.

By N26

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