Family Budgeting 101: Simple Steps to Financial Freedom

It's a basic truth of parenthood: Kids are freakin' expensive! After our third child was born, we realized that between twice weekly trips to the grocery store, preschool tuition, doctors visits, and too many Target clearance binges, we were spending more than we were earning. It was time to make a budget! Once we committed to it, creating a budget was actually quite simple and painless. If we can do it, so can you!

Follow the simple steps below to see where your money has been going and figure out where you can cut back. Just a few simple tweaks can help things really start to fall into place.

Basic Budgeting 101:

Calculate Your Earnings- Add up your total average monthly household income.

Track Your Spending- Over a three month period, write down everything you spend money on, and organize the spending into the following categories.

  • Fixed payments- These stay pretty much the same every month. It will include your mortgage or rent, utility bills, insurance, car payments, subscription services like Netflix or Apple music, etc. In our house this category accounts for about 50-75% of our overall spending.
  • Medical- This includes doctor, dentist or vet visits, and any prescriptions. These costs will most likely change from month to month.
  • Necessities- Groceries, toiletries, pet supplies, school supplies, car maintenance and gas are all added up here. If you are anal retentive like me, you can split this category into further sub-categories.
  • Fun Spending- This will be things like dining out, buying coffee, movie tickets, concerts, clothes, shoes, etc.
  • Savings- Include this category only if you are currently saving money for things like your child's college fund, vacation or unexpected home repairs.

You can use free apps like Mint or Fudget to help you with this step.

Analyze Your Spending- Subtract your expenses from your total income and see where you are. If you have money left at the end of each month, you're definitely on the right track. You can start thinking about where you want to save that leftover income. However, if you realize, like we did, that you are spending more than you're bringing in, you'll now be ready to make some hard decisions about your spending. Obviously you can't do much to change your fixed payments, but you can definitely cut costs in the fun spending area and make money saving tweaks to things in the other categories.

Cut Costs- Try some of these budget boosting strategies to help your family save money each month:

  • Lower Energy costs- By making small changes like lowering the thermostat in the winter, taking shorter showers and turning out lights when leaving a room, you can save on utility costs each month while also reducing your carbon footprint.
  • Cut Cable and Phone Service- We saved over $60/month by switching from a bundled service to only internet and subscribing to Hulu instead.
  • Negotiate Better Rates- If you can't cut the cord, you can still save money on cable, internet and phone bills by shopping around and negotiating lower rates. An employee at our internet provider actually recommended doing this every six months. You can usually get a lower rate, especially if you've been a loyal customer or you're considering changing providers.
  • Meal Plan Weekly- Planning out meals every week can really cut down on both food waste and grocery store spending. Also, if you have a planned menu, you'll definitely eliminate those nights that you eat out because you have no idea what to make for dinner.
  • Make Lists-Whether you're shopping for groceries, clothes or toiletries, always make a list and stick to it. It's such a basic idea, but it leads to big savings if you can follow through!
  • Get it Delivered- I recently started having my groceries delivered through Shipt. You can choose from Lidl, Kroger and Target. I've been getting all of my groceries from Lidl. Many of our weekly staples are crazy cheap there, and the quality has been great. Getting my groceries delivered means I won't be buying extra food because I'm shopping hungry, and I know the total before I check out so, if I feel like I've overspent, I can adjust as needed. I've been saving an average of $50/week.
  • Eat less meat- There are many vegetarian options that are much cheaper than meat. Consider adding in one or two meatless meals a week to cut down on your grocery bills.
  • Get to Know the Farmer's Market- When you're eating the rainbow, those produce bills can really add up! Save money on produce by shopping local.
  • Dine Out Only Once per Week- The cost of even a meal for two is rarely under $30, more if you order drinks and dessert. Cutting down to only once a week will help you save big.
  • Brew at Home- My Starbucks addiction was killing our budget. If you can't live without lattes or cappuccinos, invest in a quality espresso machine with a milk frother.
  • Invest in Reusable Items- One company that does a great job of providing these types of products is Norwex. Since I purchased the enviro cloths and window cloths, we no longer use paper towels. We also bought wool dryer balls that eliminate the need for dryer sheets, which are actually really harmful to the environment. I love saving money and I also love not throwing more paper products into the landfill. We also invested in quality reusable stainless steel water bottles and no longer buy disposable plastic bottles.
  • Buy Kid Gear Gently Used- When it comes to children's clothing, toys, and other gear, let the grandparents buy all the flashy new stuff. Kids bodies grow and change so quickly, and so do their interests. You might start Christmas shopping early and buy your Paw Patrol obsessed child an expensive Rubble action figure in September, but by December they only have eyes for PJ Masks! It just makes sense to shop garage sales or Craig's List whenever possible, or arrange kids book, toy and clothing swaps with friends.
  • Or there is always this......

Be a Saver- Once you've figured out how to lower your expenses so that you have something left at the end of each month, you should set up a monthly direct deposit into your savings account. This guarantees that you will be putting money away for a rainy day. You never know when an emergency will arise, so having a savings fund to draw from is really important.

Make sure you have a conversation about what the savings account will be used for to avoid arguments about money later on. I felt like one of the points of our savings account was to have money for vacations and holiday gifts, things that are expensive and add up quickly. However, my husband felt like it should be saved for emergencies only. Talking through our expectations and saving goals helped us make sure we were on the same page.

Prepare for the Future-Another thing we did when we started budgeting was finally setup our children's 529 plans. Some of our leftover income goes into monthly 529 contributions that are also direct deposited into each account. The VA 529 plan has three options, so you need to do your research to see which program is right for your family.

Review Your Budget- As your family grows and changes, your budget may look different as well. Also, unexpected expenses may make budget changes necessary. Take time to sit down together at least every three months, preferably with a bottle of wine, and make sure things are still on track.

For parents of young children, now is the best time to start budgeting to become both financially secure and financially aware. It will benefit you, and it will greatly benefit your children as well. Children with parents who understand how to handle money will grow into adults who know when to spend and when to save!

Happy Budgeting!

♥ Erin