Developing and sticking to a budget is important. However, for many singles (and even couples), it’s easy to let the budget slide or not create one at all. You are accountable only to yourself.
When you have children, priorities change. It’s no longer just about having enough paycheck to get through the month. You have to make sure you have sufficient funds to take care of your kids — and frankly, they’re expensive.
So your financial priorities shift once you have a family. Your budget, if you had one beforehand, needs to shift as well. Here are four budgeting tips to help your family thrive both now and down the road.
1. Make Sure You Can Track Expenses Easily
Every budget begins with an inventory of fixed and variable expenses. You need a snapshot of where your hard-earned pay is going every month. Where it was going pre-family will be a very different picture from where it’s going now.
Once you see how you’re spending your money, identify expenses you can eliminate. Too many subscriptions to streaming services is a great place to begin. Then there’s all that money you spend on eating out when eating in is healthier and more family-friendly.
Inventorying expenses is the place to begin, but it’s not a one-and-done proposition. You need to track your expenditures every month or risk blowing your budget.
To make tracking easy and purchases interest-free, use your debit card. It’s significantly easier to track transactions online than try to hang on to receipts for cash buys. Plus, you can connect your checking account with your budgeting software for automatic downloads.
The other thing that happens when you have a family is that you get infinitely busier. Monitoring expenses is critical to sticking to a budget. You’ll want to make it as effortless as possible.
2. Develop Alternatives to the 50-20-30 Budget Rule
The 50-20-30 budget rule has been a standard recommendation for a long time. You are supposed to use 50% of your paycheck for essentials, 20% for savings and retirement, and 30% for nonessentials. Depending on who you are and where you live, this rule may need to be broken.
Housing may be the first impediment to this approach. The cost of housing in urban areas may push your essentials category over 50%. Moreover, essentials may now include diapers, formula, and daycare, none of which are cheap.
The premise behind the rule is sound. You divide your paycheck the same way every month, which helps you stay on budget. Just don’t be afraid to create your own percentages that work with your pay, your family, and your new life’s essentials.
It is smart to automatically stick 20% into retirement or savings. The pandemic revealed that most people don’t have enough savings to get them through the recommended six months without pay. With kids, you aren’t going to be able to get by on ramen noodles and boxed mac and cheese.
Once that 20% is tucked away, you decide how to spend the other 80%. Just resist the temptation to skimp on the family essentials to buy what’s not necessary. Especially with kids, food, clothing, and shelter trump frivolity every time.
3. Let Software Do the Heavy Lifting
When you have a family, your top priority becomes spending all the time you can with those you love the best. Most parents would rather be playing Go Fish or tag with their kids than poring over the family ledgers. It’s the 21st century, so find a budgeting software program to do the work for you.
Back in the day, you could choose between Quicken and QuickBooks. Now there are not only far more choices, but options suited to certain budgeters. Some are better for investors or retirees, while others are ideal for young professionals or families.
Most software programs offer free trials so you can try before you buy. And don’t forget to read customer reviews. Those might help you reduce the field and make your final purchase decision.
Look for software with features you can customize. Seek out programs that connect and download data in real time from, for example, your checking account. One that comes with a mobile-friendly app that provides push notifications is particularly beneficial.
You will need to invest some time and effort to get up to speed on your new budgeting software. Once you do, you can get back to that rousing game of Monopoly. Let your software worry about banking the real money.
4. Set Goals for Financial Success
Establishing and monitoring a monthly budget is great, but it’s not enough. If you don’t set goals for saving and spending, you’re still just living paycheck to paycheck. Progress toward goals is the measure of your budgetary success.
Paying off debt should always be an objective, and that can take different forms in your budget. If you have a chunk of credit card debt, make sure your budget accommodates not using that credit. Then, budget extra money for the time it takes to pay off the balances.
If you want to pay off your mortgage or auto loan faster, allot funds for that. Paying even a little extra on the principal every month works wonders. Instead of budgeting the $1,487 mortgage payment, budget $1,600 to reach your goal faster.
It’s important that your budget include not only regular contributions to savings and retirement, but to your kids’ college funds as well. And you can make life easier by socking a little money away for other, less weighty purposes. Set your spending goals for the holidays and family vacations and save accordingly.
The whole point of a budget is to let you decide where you spend your money. Otherwise, you’ll find that your money is spending itself. Setting family-friendly goals provides the structure for your budget.
Families without a budget are working without a net, so make sure you have one. Remember that once you have kids, everything in life needs to become a little flexible, including your budget. A little give there is far better than nothing but take.