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Budgeting For A Family With Kids

Budgeting For A Family With Kids

As every parent knows, children can be expensive. As they get older, costs can balloon out of control and money can get tight. So the question is how do you keep costs under control while still providing the best for your children. The answer is to use a budget. A family budget doesn't have to be a bad thing with negative connotations if implemented wisely and used with reasonable expectations. Knowing where the family money is spent and on what items can go a long way toward getting more for less and planning for the future.

The Basics

A personal or family budget can be broken down to the simple components of what money is coming in and what money is going out. Understanding the inflows and outflows of the household income is the key to budgeting. Start by making a basic T ledger to list sources of income on the left and expenses on the right. This will provide a clear picture of where money is being distributed and whether or not more money is going out than coming in. Various pieces of software can help in tracking monthly expenditures to simplify this process. The software can also create graphs to provide a visual representation of how income is being distributed.


Once you know where your money is going you can then see if your money is going to the right places. Right means what is right for you in both the short and long term. Some expenditures are necessary like rent or a mortgage as well as food, clothing and utilities. These would be considered a first priority. Secondary priorities would be considered insurance, education and travel expenses. Finally, the least important priorities would consist of entertainment and gifts. By ranking the various expenses from one to three you can easily determine what can be cut immediately or scaled back to free up financial resources.

The goal is not to become a hermit with no possessions but to live within your means. Children will still want pizza and to go to the movies and that has to be considered when creating a family budget. But once expenses have been categorized and prioritized then the real work of creating a monthly budget can begin. You may find that, to keep the kids happy, you were eating pizza five nights a week which can be both expensive and unhealthy. Making some minor adjustments can go a long way towards giving everyone at least some of what they want.

Fixed vs Variable

The monthly rent is a fixed expense but food is a variable expense. The cable bill is a fixed expense but the water bill is a variable expense. Here is the key to budgeting, even though the cable bill is a fixed expense it is also a low priority and even though the water bill is a variable expense it is a high priority. By applying priorities to both types of expenses you can spend more on what is really important and less on what isn't really necessary. Children won't necessarily care about any of this but a smart parent can still give their children what they want while working within the confines of limited resources.

Spending Limits

Everything that has come before is to lay the foundation of actually creating the family budget. In order to spend the family money wisely you first have to get the complete picture of the families finances. The overriding goal of a budget is to have the total income for the month equal the total expenses for the month. Go back to the list of prioritized expenses and group all the ones, twos and threes on a sheet of paper. Next to each item write down the average monthly cost and then total that number at the bottom.

Fixed high priority costs will likely not have any wiggle room but will hopefully take less than half of the family budget. Variable high priority costs like utilities can be adjusted. If the electric bill is high there are numerous steps that can be taken to lower electric usage like turning off lights and selling the extra refrigerator. If the water bill is high try taking shorter showers or turning the front yard from a lawn into xeriscaping. Entertainment which is both a variable expense and low priority may have to be trimmed back so if you find out that $400 per month is going to entertainment try setting a limit of $200. You might be surprised that you can have just as much fun for less money and the children will still be happy.


Creating a budget can be a lot of work initially. Gathering receipts and monthly bills and then listing them all by category and priority takes time and effort. This groundwork is a necessary step however in knowing what your money is doing. Once you know that, you can start making your money work for you. Sticking to a budget is the most difficult part for most families. Unexpected expenses pop up and the best laid plans can go awry. A well implemented long term budget can provide for retirement and savings and family vacations while still living within your means. The key is controlling your money and making it work for you and not the other way around.