Budgeting For A Family With Kids

Tips for budgeting in a family with kids. Kids are a joy, but at times an expensive joy.

Kids are a joy, but at times an expensive joy. If the month's money sometimes runs out before the month's bills, you are not alone. Many families with growing children run into a money crunch. Budgeting is a relatively painless way to cut back on spending and perhaps eliminate those "short" months. By planning to spend certain amounts and tracking how you do against those plans you will be more aware of how much you have to spend and be able to stop spending before it's too late.

There are several software packages that will make it easier to set up and record a family budget. If you do not have one of these packages, however, do not let that stop you from keeping a budget. You can record your budget on paper and figures with a calculator or set up a spreadsheet instead. The important thing is to identify spending and keep track of it. Neatness and efficiency are convenient but not mandatory.

Identifying Key Spending Categories

In a family with kids some spending categories are more likely to get out of hand than others. These are the ones you will want to keep an eye on throughout the month. Common kid-sensitive categories are: Food, clothing, medical, education, gifts, and entertainment. Other high-volume categories are: Rent/mortgage, insurance, utilities, car payment, and savings (although contributing is difficult and sometimes impossible, savings are a critical long-term part of a budget). Think about your personal situation and add your individual budget categories to this list. You will also want to add a "miscellaneous" category for small expenses that do not fit into one of the other categories.



Creating The Budget

Once you have identified all of your budget categories you will need to create monthly spending limits for each. First list all of your categories on a sheet of paper or in your computer software. Then begin splitting your monthly income between all categories. Start with the amounts that are the same each month such as insurance, the mortgage or rent payment, and the car payment. Next fill in the categories that are necessary but are somewhat under your control, such as electric, clothing, and food. When setting your budget amounts for these items write down reasonable but not lavish figures. For example, you may want to budget in one meal out a week for you and your family. Next, commit to saving a certain amount each month. Finally, fill in your "luxury" items like cable TV and entertainment.

Once you have filled in a target spending amount for each category you will most likely need to edit your spending amounts. Add up all of your figures and compare the total to your monthly income. The goal for your budget is to have monthly spending and savings equal to monthly income. If you are lucky, monthly spending will be less than monthly income. If this is the case, increase your savings amount so that the budget equals your income. Most likely, however, you will have to cut back somewhere. Begin with discretionary spending such as entertainment. It is easiest to find ways to cut back in these areas. As an example, instead of taking everyone to the movie theatre twice a month, you could rent a movie and make popcorn at home or go to the "dollar" theatre. Next, scrutinize the "necessary but controllable" expenses. There are usually ways to control those costs as well. Examples include brewing coffee at home each morning instead of stopping at Starbucks or shopping for clothing at consignment stores. Only as a last resort will you want to decrease your savings number.

Tracking Your Spending

Now that you have created your budget it is time to implement it. Keep track of most of your spending throughout the month. Depending upon how detail-oriented you are and the tools you are using, you can track every day, once a week, or once a month. The important thing is to be aware of how much you are spending and how that compares to what you are actually spending.

If you compare what you spend each month to your budget and adjust your expenditures accordingly, those months that you find yourself "short" will become fewer. As an added bonus, you will be creating habits in your kids that will help them throughout their lives.

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