Practical Tips for Sticking to a Budget as a Large Family
If you’ve been struggling with your monthly budget and need some realistic goals, today’s post is for you! I’m sharing all my best tips for sticking to your budget and building an emergency fund for unexpected expenses that inevitably come up from time to time.
As a large family, sticking to a budget and reaching our financial goals can be tough. We watch our spending habits, cut back as much as possible, and find creative ways to make it work.
Whether you’re saving for a family vacation, padding your bank account, or simply trying to make ends meet, these practical tips can help you take control of your finances and stick to a budget that works for everyone!
I shared in a previous post about how my husband and I were able to pay off our debt and save $20,000 for a down payment on our first home. It was tough, but with hard work and a realistic budget, we reached our savings goals and bought a beautiful home for our family.
Whatever your goal is, keep it at the front of your mind as motivation when things get tough—because they will. The good news is that you can reach your goals and fill your savings account with changes to your spending habits.
Understanding Your Financial Situation
Assess Your Income and Expenses
The first step for sticking to a budget is a clear understanding of your current financial situation. This begins with a thorough assessment of both your income and your expenses. Here’s how to get started:
Track All Sources of Income
Start by listing all sources of income. This includes:
- Salaries: Consider the net take-home pay of all working family members.
- Government Assistance: Include any benefits such as child support, unemployment benefits, or social security.
- Other Income: While not common, don’t forget rental income, dividends from investments, and any side hustles that bring in any amount of money.
Tracking these sources accurately is one of the most important tips for sticking to a budget, as it forms the foundation for financial success. Use pay stubs, bank statements, and any other documentation that provides a clear picture of your income. If your income varies month-to-month, calculate an average over the past six months to get a realistic figure. This will help ensure you have a good starting point so you can create a sustainable budget.
List All Expenses
The next step is to list all your expenses, dividing them into fixed and variable categories:
Fixed Expenses: These are consistent monthly costs that are usually non-negotiable, such as:
- Rent or mortgage payments
- Utility bills (electricity, water, gas)
- Insurance premiums (health, car, home)
- Car payments
- Loan repayments (student loans, personal loans)
Variable Expenses: These fluctuate from month to month and include:
- Grocery budget and household supplies
- Transportation costs (fuel, public transit fares)
- Entertainment and dining out
- Clothing and personal care
- Credit card debt
- Miscellaneous expenses (gifts, donations, etc.)
Tools for tracking bills and finances
Keeping track of monthly income and expenses can be overwhelming, especially for a large family. Fortunately, there are many tools and apps available to help:
- Monarch Money: A comprehensive financial management tool that syncs with your checking account, categorizes monthly expenses, and provides budget tracking.
- YNAB (You Need A Budget): A budgeting app that focuses on proactive budgeting, helping you allocate income to specific categories and track spending.
- Spreadsheet Programs: A simple Excel or Google Sheets spreadsheet can also be very effective for those who prefer a manual approach. This is my favorite because it’s simple, and I don’t have to worry about a potential subscription fee or someone hacking into my account. I like to list my fixed and variable expenses, the due date, and the amount due or budget based on the day of the month. Then, at the beginning of the month and on payday, we go over expenses, what is coming due during this pay period, and any upcoming social events that we need to add to our budget plan.
These tools can help you visualize your financial situation more clearly and keep your data organized, making it easier to identify areas for improvement.
Analyze Spending Habits
Once you have a detailed record of your income and expenses, the next step is to analyze your spending habits. This involves reviewing your financial data to identify patterns and areas where you can cut back. Here are some strategies to help you with this analysis:
Review and Categorize Spending
Look at your spending over the past few months and categorize it into broad categories such as food, housing, transportation, entertainment, and savings. This is a great way to see which categories consume the most of your income and where you can potentially cut back on spending.
Identify Trends and Patterns
Examine your categorized spending to spot trends. For instance, you might find that a significant portion of your money goes toward dining out or entertainment. Identifying these trends is key to finding opportunities to cut back.
Look for Red Flags
- Frequent Dining Out: If you notice you’re eating out often, consider meal planning and cooking at home.
- Impulse buys: Regular unplanned purchases can add up. Try to limit these by creating a grocery list and sticking to it.
- Unused Subscriptions: Cancel any subscriptions or memberships that you’re not using regularly, whether it’s streaming services, gym memberships, or magazine subscriptions.
Track Small Expenses
Small daily expenses, such as coffee runs or snack purchases, can accumulate significantly over time. Tracking these can reveal surprising drains on your budget.
Set Financial Goals
Setting financial goals gives your budget a purpose and direction. These goals should be both short-term and long-term, providing a roadmap for your financial journey. This is one of the most important tips for sticking to a budget, as it keeps you motivated to reach your goal.
Involve the Whole Family
Make goal-setting a family affair. Hold a meeting where everyone can contribute ideas and express their priorities. This inclusion helps ensure buy-in from all family members and teaches children valuable lessons about money management.
Define Clear Objectives
You should be implementing SMART goals:
- Specific: Clearly define what you want to achieve (e.g., save $5,000 for a family vacation).
- Measurable: Establish criteria for measuring progress (e.g., save $200 per month).
- Achievable: Set realistic goals that can be accomplished given your current financial situation.
- Relevant: Ensure the goals are important to your family’s needs and long-term plans.
- Time-bound: Set a deadline for achieving each goal (e.g., within two years).
Examples of Financial Goals
- Short-term Goals:
- Build an emergency fund of $1,000.
- Pay off an outstanding debt within six months.
- Save for a new appliance or home repair.
- Long-term Goals:
- Save for a down payment on a house.
- Fund a college savings account for each child.
- Plan for retirement by contributing to a 401(k) or IRA.
Motivate and Monitor Progress
Review and discuss these goals on a regular basis during family meetings. Celebrate milestones to keep motivation high, and adjust the budget as needed to stay on track.
Creating a realistic budget you can stick to
The only way you’re going to stick to a budget is if it is both realistic and effective. One of the best tips for sticking to a budget is to make it sustainable. I know that might seem obvious to some, but what good is a budget if it’s so tight that you can’t enjoy anything?
To keep you motivated, add some wiggle room for unexpected expenses or fun experiences, and choose a budgeting method that suits your lifestyle.
Choose a budgeting method
Selecting the right budgeting method for your family is crucial for successful financial management. Here are three popular methods to consider:
Zero-Based Budgeting
Zero-based budgeting involves allocating every dollar of your income to a specific expense, savings goal, or debt repayment, ensuring that your income minus expenses equals zero. This method helps you account for every dollar, making it easier to control spending and prioritize financial goals.
This is the method we use. It works best for us as it forces us to look at our budget often and make adjustments. We leave a padding of about $100 in our checking account, but any money beyond that is transferred to our savings account.
- How it Works: Start with your total monthly income. List all your expenses, including savings and debt repayments. Allocate funds to each category until your income is completely allocated.
- Benefits: Provides detailed control over your finances, helps identify wasteful spending, and encourages proactive saving.
- Challenges: It can be time-consuming to maintain and requires regular adjustments to income and expenses.
Envelope System
The envelope system is a cash-based budgeting method that involves dividing your income into different spending categories, each represented by a physical envelope filled with cash.
- How it Works: Determine your spending categories (e.g., groceries, transportation, entertainment). Based on your budget, allocate a specific amount of cash to each envelope. Spend only the cash in each envelope for the designated category.
- Benefits: Encourages mindful spending, prevents overspending by limiting available funds, and is easy to visualize and manage.
- Challenges: It requires carrying cash, which may be inconvenient or less secure. Heading to the bank every payday and requesting specific amounts for envelopes is too much of a hassle for me, but do what works best for your lifestyle.
50/30/20 Rule
The 50/30/20 rule is a straightforward budgeting guideline that divides your income into three main categories: needs, wants, and savings/debt repayment.
- How it Works: Allocate 50% of your after-tax income to needs (essential expenses), 30% to wants (non-essential expenses), and 20% to savings and debt repayment.
- Benefits: It is simple to understand and implement, provides a balanced approach to budgeting, and allows for flexibility in spending.
- Challenges: It may not be precise enough for families with irregular incomes or specific financial goals.
My best tips for sticking to a budget
Choose where to cut back
While this part can be stressful, it’s an important step to take. Instead of feeling overwhelmed, focus on one category at a time.
Groceries: Track your spending and see where you can make changes to your budget. I know how difficult this can be, but we’ve been able to keep our trips to the grocery store under $200 a week as a family of 8! It is pretty incredible when you consider that the national average for a family half our size spends around $200-$500 per week for fewer people.
Subscriptions: I like to chat with our service provider for internet, car insurance, and our phone company to check for any potential discounts every 3 or 4 months. I’ll also check with competitors to see if their prices are better. Last year, I saved us over $700 by switching our car insurance to another provider! Also, consider alternating between streaming subscriptions to save a little more each month.
Personal habits: Do you turn the lights on in every room you enter? Try to be aware of these habits and turn off lights when you leave. We also keep our heater set to a lower temperature in the winter and our AC a few degrees warmer in the summer. I’m only talking about 2-3 degrees, but even that can make a difference in your utility bill.
Increase your monthly income
If cutting back isn’t cutting it anymore, or you’ve done all you can to create a budgeting plan and make necessary adjustments but are still struggling to make ends meet, it might be time to find ways to increase your monthly income.
I know It may feel discouraging, but with the rising costs of literally everything, the best way to have financial success is to increase your monthly income. Whether that’s through getting a second job or finding a side gig, if you’re worried about not making enough money, it’s important to make changes immediately.
Here are some ideas that may be helpful:
- sell unused items around your home
- create a digital product you can market and sell
- find a part-time job
- try in home childcare-I’ve done this on and off for a few years when things are tight. The extra income is nice, and my kids have someone to play with.
Whatever may work to bring in extra income, give it a try. The worst thing that could happen is you don’t make any extra money. I started this blog to share encouragement and advice for other families, but I also hope to make an income from it someday as well. Some of the best ways to make extra money include monetizing something you’re already good at. Whether that’s baking and selling goods, crafting, woodworking, etc., think about how you could make money by sharing your talent. I love writing, so blogging has been great for my creative side.
Final thoughts
I know that creating a budget and sticking to it can be difficult, especially for a large family. We scraped by for years, making a tight budget work, but it was tough. By cutting back on impulse purchases, grocery shopping with a plan, and making changes to our spending habits, we completely change our financial health.
I hope these tips for sticking to a budget have helped you learn how to track everyday expenses and make changes that will help you reach your financial goals easily.
Remember that regularly reviewing and adjusting your budget, staying flexible, and celebrating your successes in your financial decisions will help you stay on track and continuously improve your financial management.
If you have a tip or piece of advice to add that’s helped you take control of your money, please share it in the comments below!
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