How To Make A Budget For A Large Family

If the idea of sitting down to create a family budget seems overwhelming, it doesn’t have to be.

You are busy. I get it. But, managing your money is not an impossible task.

Money is an emotional topic for many of us. It is much easier to look the other way and hope that our money worries resolve themselves. This is especially true if you are in a relationship with a partner who has different money priorities.

However, taking the time to seriously look at where your money is going will make you feel more in control. The first step to solving your money worries is to look them in the face.

Think of it as an opportunity to bring your family together…for everyone to work towards a common goal. When my children ask for a new toy, I find it much easier to say “No” when they are aware of our family budget.

In this post I will lead you step-by-step through the process of creating a family budget that covers the items associated with a large family. There are also straightforward family finance templates to make your budget and your life easier!

So let’s go through these FIVE steps and make a family finance budget..

steps to make a budget for a large family

step 1 – set goals

Identify reasons why you want to budget your money. You will be more motivated to stick to your budget if you have clearly established goals to works towards.

Include the entire family in this process. Allow your kids to provide their input. Choose one family goal that you all agree upon, perhaps a family vacation or getting a dog. Assign roles to your kids. Perhaps your oldest child can input your weekly spending amounts onto a spreadsheet or chart. My 5-year-old daughter likes to help write out our grocery lists, with the added benefit of practicing her letters.

Your goals will either be short term, like paying off your credit card debt, or long-term, like saving for retirement.

Here are some example goals:

• pay off credit card debt
• save for a down payment on a house
• save for a family vacation
• contribute to a Registered Education Savings Plan (RESP)
• pay off your student loans
• stop borrowing money from credit lines
• get a family pet

Having clear goals is liberating. Now you know what you want your money to be spent on. Most people without clear goals spend their money randomly and run into trouble.

Write down your goals on a chart or spreadsheet. Do this as a family if possible.

Now make a realistic plan to achieve your goals. How much money do you need to set aside each month to reach your goals? Where will this money come from…your paycheck, extra income?

Here is an example table you can follow

Goal	Approximate Cost	Target Date	Monthly Contribution Amount	Source of Income
Pay off line of credit	$5000	Approx. 2 years and 1 month	$200 + interest	1st pay of the month

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Step 2 – figure out your income and expenses

Now that you have made a list of goals, it is time to find out where your money is coming from and where it is going. You may already have an idea what these numbers are but it is empowering to write them down. This is a big step towards taking control of your finances.

Make a list of all sources of income

• wages after tax
• second income after tax
• child tax benefit
• commissions or tips
• self-employment income
• pension
• child support payments

What to do if you have irregular income

You might not make the same amount of money each month. You may be self-employed, do seasonal work, or work on commission or tips. This just means you need to plan your budget carefully. There are 3 ways to handle this:

1. Calculate your average net income for one year and divide by 12 to get your monthly income. Use that amount to make your budget. If your monthly expenses exceed that amount you need to increase your income or reduce expenses.
2. Set up a separate bank account for all your income sources and give yourself a monthly income from this account. During better months this account balance will grow and in leaner months it will shrink. But, you will only withdraw the monthly income you have assigned yourself.
3. The last option is to build a family budget based upon your leaner months. This may be challenging because it forces you to minimize your expenses. However, you will have extra savings built up during your better months that you can put towards one of your goals.

Related Article: How to Save Money on a Low Income

track your expenses

Next you need to record all of your expenses. This list will no doubt be longer than your income list. You will need to gather your monthly bank account statements, credit card bills, automatic debits payments, utility bills, debt payments, RRSP contributions…anything and everything you spend money on.

Most of our spending is on a weekly or monthly basis. However, don’t forget to include expenses that occur irregularly, such as property tax payments, Christmas gifts, or dental visits. To calculate the monthly amount you spend on these items just add them up and divide by twelve. For example, if you spend $600 on Christmas gifts, your monthly amount will be $50.

To make your list, click here and use a Family Budget Planner Spreadsheet in Excel or Google Sheets.

Fill in the columns marked Original. The New columns are for the new budget you are going to create in Step 4.

If you prefer a printable Family Budget Planner AND Weekly Expense Tracking Sheets, fill out the Sign-up form below and you’ll receive our Family Budget Bundle in your inbox. Attach them to your fridge or make a budget binder to keep you motivated.

When you add up your spending amounts, don’t be surprised if you have some money unaccounted for. Little things like coffee or school lunch money can go unnoticed but add up.

To be absolutely certain where all your money is going, track all your spending for 2 months. Don’t be tempted to fudge the results to make them look better! You will be making adjustments soon. Right now you want accurate results.

Read: How To Budget For A New Baby: First Year Checklist

step 3 – separate needs from wants

Now it’s time to bring out the self-discipline. You need to separate your spending into needs versus wants. A need is something your family must have, for example food and shelter. A want is something you can do without. For example, dinner out at a restaurant or impulse shopping at the mall.

Make sure to involve your kids in this process. Learning to separate needs from wants is the basis of good money management and can set them up for lifelong healthy money habits. Often we use spending as a mood lifter when we are feeling stress. Teaching kids to find other ways, like exercise, to boost their mood is a great gift you can give them.

Before you purchase a “want” item, shop around. Look online to find the best price. See if you can buy the item secondhand, like a used car. Remember, every bit of money you can save will bring you closer to the goals you listed in Step 1.

Read: Smart Ways To Save Money On Back To School Expenses

step 4 – make your budget

Don’t think of “budget” as a bad word. In fact, it is your plan towards freedom from money-related stress.

The most important aspect of your family budget is that your expenses don’t exceed your income. Remember, your expenses include everything you spend money on, even money that goes into savings accounts or RESPs.

Use the Family Budget Planner printable from Step 2 and fill in the column amounts marked New to create a budget you can stick to.

This is where you will need to make some tough choices. If your expenses were more than your income in Step 2, you will need to reduce them. Or you can find ways to bring in more income. Remember the goals you set as a family. Which expenses can be cut to help you reach your goals?

emergency savings

Your budget needs to balance. If you have extra income, great, add it to your savings. Your savings should serve 3 purposes:

Long Term Savings: this is the money you deposit into a Registered Education Savings Plan (RESP), Registered Retirement Savings Plan (RRSP), Tax Free Savings Account (TFSA), or invest in the stock market over the long term. This is the money that you want to grow over time to help you towards your long-term goals. The most important thing you can do is set up automatic withdrawals from your bank account into your savings accounts every month. Don’t rely on yourself to remember to transfer money over. You are busy and you will forget!

Emergency Savings: this is the money you set aside for emergencies. Emergency savings should cover your living expenses for at least 3 months in case you lose your job or are injured. Again, set up monthly deposits into a separate savings account.

Short-term and Seasonal Savings: this is the money you set aside for your short-term goals (example: family vacation) and for seasonal expenses. Seasonal expenses are items you spend money on during certain times of the year. For example, your property taxes, winter snowsuits for your kids, and house repairs. Make this account separate from your other savings accounts. Set-up automatic deposits from your pay. Only use this money for your planned seasonal expenses and short-term goals.

Read: 7 Great Tips To Save Money For Maternity Leave

Do You Need A Complete Budget Tool Kit?

Tools I’ve Developed To Help You Stay On A Budget And Get Out Of Debt

If you haven’t yet started a budget or if you are having difficulties organizing your current budget plan, don’t worry, I have a great new resource to help you. I’ve designed The Family Budget Planner to help my family, and yours, build a practical, time-saving budget plan.

No other budgeting planner is specifically designed to help families manage their finances. It will help you set goals for your money, track your income and expenses, pay-off debt, monitor your savings, and, of course, create a workable budget plan.

The Family Budget Planner is created with family living in mind and includes savings and spending trackers just for the kids. I have 4 young daughters, so I wanted to make a budget planner that includes all the kid’s expenses. There is also a mini-budget sheet for children to use – what a great way to teach kids about money!

If you are the kind of person who likes to have a ready-made plan (with all the organizational tools you’ll need) laid out before you, then The Family Budget Planner is designed for you. Get it and get ready for a sunnier financial future.

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step 5 -revisit and revise your family budget

As a family, you have made a list of goals, tracked your income and expenses, separated your needs from your wants, and created a new budget to help you achieve your goals. In your budget you have set aside money for savings; long-term, short-term, and emergencies.

Continue to track your spending using a spreadsheet or our weekly tracking sheets from Step 2. Involve your kids in putting together a family budget binder. Kids might enjoy writing down expenses on your tracking worksheets as well as the math involved in calculating your weekly/monthly balances.

Give yourself three months to revise your spending plan. There may be expenses you forgot about when you created your budget. Perhaps you were more ambitious with your savings goals than is practical. That’s okay. Consider your budget a work in progress.

For the first year, review your budget every month. Are you sticking to your set spending amounts? Is the budget plan working for your family? Have any of your family circumstances changed that require you to adjust the budget (example: new baby or new job)?

After the first year, your budget plan will become a natural part of how you run your family finances.

Well done! You have created a solid plan for your families future and you have taught your children invaluable lessons about how to manage money.

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