Does the idea of setting a household budget sound intimidating? You’re not alone — in fact, one report shows that only 2 out of every 5 families use a household budget to take control of their finances.

Budgeting and planning family finances are key to controlling spending and planning for a healthy financial future. If you know where your money is going each month, you can start achieving your financial goals and put your whole family on the path to financial success.

Why should I make a family budget?

There are many benefits to having a family budget. Knowing where your money is going can provide a sense of empowerment and give you a roadmap to your financial goals.

  • Reveals wasteful spending: By identifying your “budget busters,” or any small amounts you and your family spend day-to-day without thinking about it, you may be able to reduce unnecessary spending.
  • Provides direction for your future: A budget gives you a “big picture” view of your finances that can help you set clear priorities for spending and saving.
  • Educates: Planning and following a budget can teach you and your family how to use money as a tool to achieve the things that are important to each of you.
  • Creates healthy habits: By focusing on your priorities, you can say no to unnecessary spending, which can break old habits and form new, healthier ones.

How much does it cost to raise a family?

In addition to the love that a family brings, there are multiple costs that go into raising a family that can add up quickly. In fact, a family will spend approximately $12,980 annually per child in a middle-income, two-child, two-parent family.

The cost of raising a family can vary based on where you live and the number of children you have in your family. Costs involved in raising a child include housing, healthcare, childcare, education, transportation, food, and clothing.

Why should I talk to my family about budgeting?

Talking about money with your family can be challenging. According to one study, almost half of all Americans (44%) say money is the most difficult thing to talk about — more difficult even than death, politics, or religion.

Although conversations about money can be stressful, having family conversations proactively may help everyone in your family work together toward healthy financial goals.

  • To teach children healthy financial habits: Children are listening to you, and when you set a good example with your finances, they will learn those skills as they get older.
  • To be transparent about your household expenses: Your family may not know how much your housing costs, or how much you spend each month on utilities and other monthly household expenses. When you are open about this information, it may give your family perspective on how much money is available for entertainment and extra purchases.
  • To help plan the future: When talking about finances, you can also discuss savings goals like college tuition, and be proactive in planning for these future events with your family.

When should I discuss financial habits?

There will never be a perfect time to discuss budgeting with your family, but here are some tips on how to go about it and when to make opportunities.

  • Partner: Even if one person takes the lead on day-to-day money management, it is important for both of you to be aware of key financial information in case of injury, illness, or incapacity. Schedule time together to talk about finances and find objective, tangible things like accounts and documents to guide conversations about money.
  • Family: You may find it helpful to set a regular time to check in with your family about finances, whether it’s during dinner or when you are having family time together.

Creating a family budget

A common method of figuring out how to budget is the 50-30-20 rule, which recommends that you spend 50% of income on needs, 30% on wants, and 20% on savings or debts.

However, several factors go into how much you need to spend on your needs, including where you live and the size of your family.

Tracking your expenses

To get a good idea about how much money you need to set aside for wants and needs, it’s important to track your expenses.

Notebook and pencil

Writing down your expenses by hand is a method that is tried and true.


Sample budgeting spreadsheets are available online with the formulas built-in, or you can build one on your own. Either way, a spreadsheet can do the math for you.

Using free online software or app

Using technology that can be customized or even linked to your accounts may help you stay on top of your spending and saving.

Envelope method

  • Assign an envelope for each expense category.
  • Use each to hold the budgeted amount of cash and receipts for expenses in that category.
  • When the cash is gone, no more spending in that category.
  • Add up the receipts at the end of the month and adjust your budget as needed.

Explore the different budgeting tools available online and pick one that works with your lifestyle to begin tracking your expenses.

Managing household debt

If you have debt, you may feel anxious or overwhelmed. In fact, many Americans have debt. The interest and fees we pay to take out a loan can burden us for years. Therefore, minimizing debt as much as possible is so important for our financial well-being.

If you’re struggling with household debt, you have options.

  • Downsize: Many Americans are in debt for items they really can’t afford (like big houses, fancy cars, and daily trips to the coffee shop). If this sounds like you, consider ways to downsize and reduce your expenses.
  • Negotiate with creditors: Did you know that lenders aren’t required to offer you your lowest qualifying interest rate? You may be paying much more in interest than you must. Be sure to negotiate with lenders for a lower rate.
  • Consolidate your debts: If you have multiple debts, consider a loan consolidation service. You’ll be issued a new larger loan to cover your multiple smaller loans, which may reduce your monthly bill or even your interest rate.
  • Plan ahead: Try to get ahead of potential costly future financial events by planning in advance. For example, start savings for college early in advance, and consider getting insurance for anything that might unexpectedly set you back financially.

Next steps

Figuring out a budgeting method is the first step but maintaining and tracking your budget takes practice. This practice will eventually form a habit. Use the following strategies to help you move forward in following your budget, and, hopefully, reduce stress.

  • Set aside time to do your budget. Try to do your budget before or on your payday so that you can plan where your money will go.
  • List all your family’s expenses. Identify amounts and due dates for your bills and other expenses.
  • Do the math. Know how much you have left over after paying your bills.
  • Regularly track your spending. Check your accounts often and add up your receipts.
  • Be patient with the process. Even if your income and expenses change each month, plan where you want to spend your money. Also, know where every dollar goes, and then adjust when necessary to meet your financial goals.

The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.

Article written by EVERFI