Whatever age your children are, or if you’re waiting for the first to arrive, it’s never too late to take control of your finances and start your family budget planning.
It’s been an awfully long time since I first took the all-important step to ensure I was a saver and not a borrower.
However, when we were expecting a daughter, we estimated we’d become £800 a month worse off due to a shrinking income and a rising nappy mountain – sadly not the other way around.
Our budget planning required lots of updating, and my partner and I had to negotiate how our money would work as a family.
We hit on a system that works really well, so I’m sharing it here to hopefuly help you with your family budget too.
Plan right away
Keep a simple spending diary by just noting down all your expenditure for several months in a notebook. If there are two of you looking after the family, work together to do this effectively.
This helps you form the basis of your family budget, but you also need to consider how your monthly and annual outgoings are about to change over the next 12 months, depending on what your children are going to need.
Then estimate your earnings. If one parent has a variable freelance income, there will be some discussion about what a sensible estimate is. It’s important to be conservative and realistic, while not being too severe, and yet leaving a safety margin for emergencies and to ensure your savings will grow.
You’ll find it easier to put all this together if you use a budget planner.
Once you’ve done all that, keep track to ensure you’re staying within the limits you expected. If you’re not, ask yourself why and amend the budget if necessary. It’s also useful to keep track so that you can more accurately revise your budget planning if your family grows again.
We follow our progress using a detailed spending diary that we designed on ZOHO. I’ve created an example template on my Zoho spending diary page. Download a copy as an Excel file to use or edit it yourself, if you want.
Although you should record all your spending every day, the main figure to watch is the monthly spending money – our fun money. That’s because you’re more likely to over-spend on holidays, nights out and other enjoyable things than on domestic bills, stamps, local travel, medication, and so on.
You’ll notice that there’s no field in my template spending diary for recording savings or income. That’s not what a spending diary is for.
Reassess your family budget
However, you’ll need to add up your total expenditure from the spending diary every few months to ensure that it’s below your expectations and income, and to ensure you’re saving something or paying down debt.
Plus, at least once a year, you’ll need to do a big re-evaluation of your family budget.
As your child’s next birthday approaches, and each following birthday, consider what new costs you’ll face and which will disappear, and estimate your income for the next year. Adjust your budget again, focusing in particular, on the amount of fun money you’re allowed each month.
Give it a go, and let us know what you think!