Tips on Building a Family Budget

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Is life really cheaper by the dozen? It seems the only case where that saying is true is at the grocery store when buying a carton of eggs. Turns out, life gets more expensive when families expand. Plane tickets multiply during summer vacation, birthday presents double in size, and the need for laundry detergent skyrockets after soccer practice. Kids have so many hobbies these days, it’s hard to keep up and stay within budget.

Here’s a shocking fact. On average, it costs over $10,000 to send a kid to public school. And that’s just for one year. Most kids stay in school for about 12 years before going off to college, which adds up to $120,000 for one student. Imagine the cost for larger families with two or three kids. It’s no wonder that approximately 1,700,000 students are homeschooled in the United States. Now more than ever, parents are searching for cheaper alternatives to education, vacation, and simply setting their children up for successful futures. There is no right or wrong way to raise a family, but we can offer advice on how to create and stick to a family budget.

Step one is to get organized. Opt for simplicity—because who can do math in their head with toddlers running around? Calculators and Excel spreadsheets are about to become every parent’s best friend. In an Excel spreadsheet, dedicate each column to one of your kids. Types their name, and keep track of their expenses in each row. The goal here is to determine whether you need or want to redirect extra cash flow toward your family’s goals.

And speaking of goals, it’s much easier to budget once you determine what you’re budgeting for. Is it a Spanish-style home with a bigger backyard? A family vacation to the Maldives? A remodeling project to fix that leaky sink? Once you’ve made that decision, set a deadline, and begin the countdown. You can also divide your Excel spreadsheet into weeks or months to calculate how much money needs to be set aside each term.

Every parent wants to make their child smile, but sometimes the answer has to be no—no matter how much screaming, crying, and complaining comes afterward. As a parent, you have to juggle so many needs and wants coming from different directions. Quiet that noise by drawing a line between fixed spending and fun spending. Fixed spending includes rent, utilities, car insurance, health insurance—you know, the boring, mandatory stuff. Fun spending is the exact opposite. It’s beauty products, Apple gadgets, and designer handbags.

Related: Download the Budgeting Checklist for a list of income and expenses to  include when planning out your household budget.

Overspending on fun stuff is all about living in the moment—but how does it reflect on your credit? Here’s the short answer: not so good. Make it a pattern to routinely check your credit score after treating the kids or yourself, and consistently check account statements to make sure no one else is spending your money. Please don’t judge me, but there were moments in high school when I’d sneak through my mom’s purse and steal a 20 or two. Sorry, Mom.

Amid all this budgeting and calculating, it’s important to let yourself relax from time and time. Don’t get down on yourself if budgeting goals derail for a moment. There’s a way to provide an extra layer of protectiona buffer, if you will. Think about it this way. What’s the most you’ve ever spent on a utility bill? Let’s call that your worst-case scenario. Take that number, and build it into your monthly budget. Also set aside a “rainy day” fund and an emergency fund. Kids can sometimes be walking accidents.

Budgeting is kind of like parenting in that there’s no right way. Different things work for different families. Some will benefit from picking budget goals; others will by documenting small day-to-day expenses with no key objective in mind. All methods are perfectly acceptable. But just in case you need a little more help, please do not hesitate to drop by any of our 15 branches for a chat with a financial advisor.

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