You’ll never make it to your goals if you don’t have a game plan, especially when it comes to money. Establishing and committing to a budget takes some discipline, but once the habit is established you’ll start seeing results quickly.
The habits I’ve learned come from decades of family money management, with all its successes and failures. Here are my top 3 habits for family budgeting success:
1. Budget all Food
This is perhaps the hardest habit to establish, because families on the go can easily default to drive-thru meals. Not only is this bad from a health point of view, it wreaks havoc on your finances over time. Budgeting food comes in two steps:
- Make a Grocery List and Stick to It
It is easy to get distracted in a grocery store. The 2020 pandemic actually helps in this respect. Most grocers now have apps and online ordering platforms that allows you to make your entire list online. This means before you ever step foot in the grocery store you know almost to-the-penny how much your trip will cost. - Plan for the Week Ahead
But how do you make that list in the first place? Get a weekly planner (or use Google Calendar) and plug in what you plan to have for dinner each night that week. If you’re going to have takeout or delivery, plug that in as well, but give yourself a budget for it and deduct that amount from your weekly grocery budget. Then go to your grocer’s app and add each ingredient you’ll need to get to make each meal. Once those are inputted, add ingredients for other meals. What will you eat for breakfast each day? Will you take leftovers for lunch? If so, plan to make more than necessary so you can pack those leftovers in lunchboxes. Last, take inventory of any household and paper products you need.
Our family includes 2 adults, 2 children, 2 cats, a dog and a fish. Each week I aim to spend $150 per week on groceries, but I budget for up to $175 per week. This includes any pet supplies, toiletries, paper products and cleaning supplies.
How do I make that work?
Simply: I shop almost exclusively at Walmart or Target. Their household goods are much more affordable than traditional grocers and I am able to get everything in one trip rather than stopping at different stores each week.
2. Know when Bills Hit
If you make a list of all your income and all your expenses, it likely won’t look like real life. Why? Bills are due at various times of the month, and although you may have the income to cover them all when you look at it at a monthly level, if you have several big bills due at the beginning of the month then you’re going to go in the red each month. Also, there are many bills that only hit once a year. If you don’t include those in your budget you’ll be in trouble when they hit.
Here is what your monthly budget may look like:
| Monthly Expense / Income | Amount |
| Salary | $5,000.00 |
| Mortgage | -1,200.00 |
| Internet & TV | -150.00 |
| Mobile Phones | -150.00 |
| Lawn Service | -50.00 |
| Car Insurance | -75.00 |
| Newspaper Subscription | -10.00 |
| Electric Utility Bill | -100.00 |
| Water / Sewer Utility Bill | -75.00 |
| Gas Utility Bill | -100.00 |
| Fitness Membership | -100.00 |
| Tithe* | -1,000.00 |
| Savings | -500.00 |
| Groceries | -700.00 |
| Car Payment | -400.00 |
| Gas Fill Up Each Week | -100.00 |
| Net Profit / Loss | $290.00 |
According to this simplified monthly look, there is enough income to meet expenses. There are a lot of holes in this simplified budget. If you don’t have a solid plan for when money comes in and out, you’ll always be at the mercy of the tides of fortune.
There are two ways to solve this: either make weekly budgets or keep track of expenses in an accounting program like Quickbooks or iBank. I personally have used iBank. If you need something free, Google Sheets has a monthly budget template you can use to track transactions and make budget categories. I plug in all expected expenses as far out into the future as I’d like, and I can easily scroll to see a simulation of what our checking account balance will look like through time. If it dips too low, I know I’ll need to tighten expenses leading up to that time. Plug in your month in advance to look something like this:
| Date | Item | Amount | Balance |
| 1st | Payday! | $1,250.00 | $1,250.00 |
| 1st | Groceries | -175.00 | 1,075.00 |
| 2nd | Fill Up Car | -25.00 | 1,050.00 |
| 2nd | Tithe* | -250.00 | 800.00 |
| 2nd | Mobile Phones | -150.00 | 650.00 |
| 5th | Internet & TV | -150.00 | 500.00 |
| 8th | Payday! | 1,250.00 | 1,750.00 |
| 8th | Groceries | -175.00 | 1,575.00 |
| 9th | Tithe* | -250.00 | 1,325.00 |
| 9th | Mortgage | -1,200.00 | 125.00 |
| 9th | Fill Up Car | -25.00 | 100.00 |
| 10th | Lawn Service | -50.00 | 50.00 |
| 10th | Newspaper Subscription | -10.00 | 40.00 |
| 10th | Electric | -100.00 | -60.00 |
| 12th | Water/Sewer | -75.00 | -135.00 |
| 15th | Car Insurance | -75.00 | -210.00 |
| 15th | Payday! | 1,250.00 | 1,040.00 |
| 15th | Groceries | -175.00 | 865.00 |
| 16th | Tithe* | -250.00 | 615.00 |
| 16th | Fill Up Car | -25.00 | 590.00 |
| 18th | Gas Bill | -100.00 | 490.00 |
| 20th | Fitness Membership | -100.00 | 390.00 |
| 22nd | Payday! | 1,250.00 | 1,640.00 |
| 22nd | Tithe* | -250.00 | 1,400.00 |
| 22nd | Groceries | -175.00 | 1,215.00 |
| 23rd | Fill Up Car | -25.00 | 1,190.00 |
| 25th | Car Payment | -400.00 | 790.00 |
| Transfer to Savings Account | -500.00 | $290.00 |
Notice that had you tried to pay your mortgage on the 5th of the month you would have overdrawn your account. Also take a look at what happens mid-month. So many bills hit before that next payday that the account goes into the red by $210.00. Try to work with any accounts to stagger your payment dates to avoid this.
When you look at your month in advance through this method, you can more accurately see where you’re going to be short. The goal is for that ending balance to remain in the account so it can roll over and provide cushion from month to month. You should not see that balance of $290 and think it is up for discretionary purposes. Let it ride so when the next mid-month bill onslaught hits you won’t go in the red. Once money is transferred into savings, try not to touch it!
3. Account for One-Off Expenses
The last step is to make a list of all the one-off expenses you know you’ll see each year. Some things to consider on this list:
- Pet medical expenses (annual checkups, vaccinations, monthly medications)
- Cars’ tax and tag registrations
- Homeowners’ association fees
- Kids’ seasonal athletics registration fees
- Vacations
- Christmas gifts
Add up your budgeted amounts for these expenses and divide them by 12. This is the amount you need to be squirreling away to cover these expenses. Deduct this mentally from the remaining balance at the end of each month. If you don’t have enough remaining balance to cover these one-off expenses after the monthly bills are paid, you’ll need to find somewhere to trim expenses.
4. Prioritize Paying Down Debt
If you’re carrying debt, consider that your top priority when making a monthly budget. They say there is good debt and bad debt, but to me all debt is a literal liability. Holding on to it only prevents you from being able to make choices about where you invest and spend your money. I’ve read about techniques where you pay off one debt, then apply that amount to the next debt, etc., until you’ve snowballed all your debt away. I’ve read about how you attack the balances on the accounts with the highest interest rates.
I prioritize getting rid of debt in terms of what value the debt holds. Mortgage debt holds higher value, in my opinion, because the balance on that debt is directly related to the equity growing in the property I will one day own because of it. However car debt holds lower value because that debt is related to a piece of property that will only decrease in value. Credit card debt is the worst of all. Not only does it have obscenely high interest rates if you carry a balance, but you’ve already received the property purchased with that credit. If you can’t pay it off each month, don’t use credit cards!
Student loan debt is tricky because if you consolidate it into a fixed interest rate you lose the “federally owned” designation that could potentially see that debt wiped away with future political winds. In my opinion you should try to minimize what you borrow in the first place and it should be directly related to what kind of value you will get from the degree upon career entry. If you’re unable to justify the student loans needed, consider alternatives such as community college for core classes or attending part time and working so you can pay off tuition each semester.
If you hold all of these kinds of debts you will need to make payments on each monthly. Select the debt you want to prioritize paying off first and pay the minimum balance on the rest. Make a plan for when you’ll have it paid off and stick to it. Once that balance is gone, move to the next debt balance. Try not to bring on additional debts as you pay these off. It may mean keeping that car for 15 years instead of 5. It may mean going on more modest vacations.
That’s easier said than done because it seems the universe can sense when you’ve paid off a car and BAM the washing machine will break or CLUNK your car will need new tires. If you simply must bring on new debts, try very hard to find financing through the specific vendor. Many will have payment plans with no interest financing for a specific, short amount of time. If you must bring on these kinds of debt, it is absolutely imperative that you make those payments each month. Missing one will usually mean a default interest rate backdated from the beginning of the loan will be added to the balance.
The ultimate goal is to get down to only one debt payment a month: the mortgage. If you can do this, you’re in great shape! Then you can start adding to your principal payment each month and shorten the life of the mortgage significantly. By paying a few hundred dollars more a month on the mortgage you can take months or years off the loan payoff date, saving you lots of money in interest.
*A Note About Tithing
I included tithing in the budget example on purpose. Our family believes in Jesus and God’s divine providence over our lives. Part of that faith is the idea that we commit the first fruits of our labor to the church’s storehouses. For us, that means at least 10% of the gross amount of each paycheck, before taxes and payroll deductions come out. It is the only place in the Bible where God tells us to test Him:
Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.
Malachi 3:10
Our household has been committed to the full tithe since 2011. Since that time our income has quadrupled. Tithing hurt at first. We were a young family scraping by paycheck to paycheck. But we gave joyfully, knowing we were simply stewards of the money entrusted to us by God. Then came job opportunities. Then came promotions. Then came more job opportunities. As we continued to be faithful, opportunities were placed in our path. If we were to ever come upon hard times, my experiences over the past 9+ years have strengthened my faith in God as a provider of our needs. He meets needs, not greeds.
Not every household is comfortable giving the full tithe to a church. Some may not have the same faith system. Some may lack trust in the church as an institution. This is simply my experience that I share with you. As I grow in wisdom and gain experience handling my family’s budget, I’ve learned that faith is a big component that can’t be discounted.