Budgeting tips for families that work
When Tom Snyder coaches people in his church about how to budget, he starts by encouraging them to track their spending.
“If we don’t track, we don’t know when to stop spending,” he said. It’s easy to be bumped off track by irregular costs, such as birthday gifts or vacations, the retired engineer and financial coach in Grand Rapids, Mich., said.
Family budgeting is all about staying flexible so you can handle those irregular costs as well as unexpected challenges, including sky-high grocery prices or rising interest rates. Financial experts like Snyder said that by using creative methods to dial in a budget and trim costs in some areas, you can often still find ways to spend on what is most important to you.
Follow your rhythm, not necessarily the rules
Severine Bryan, a personal finance educator and coach based in Atlanta, said a budget needs to stay flexible and constantly adjust to challenges. One of the biggest mistakes people make is thinking they have to follow a set approach, such as the 50/30/20 budget, she said.
Bryan, who holds a doctorate in business administration, likes to track her spending with spreadsheets, but her college-age daughter prefers to use visuals and graphs. They each use their preferred method, then communicate about spending when necessary. “It has to be a method you enjoy so you want to use it all the time,” she said.
Make sure to factor in variable expenses
“The default view of budgeting is annual, but I think that can be frustrating because it’s really hard to have a perspective on your entire year in one sitting,” said Charlie Bolognino, a certified financial planner in Plymouth, Minn. Instead, start with a month-by-month approach, then take time to layer in the less predictable costs such as holiday expenses, he said. “We’ll never catch them all, but we want to reduce surprises as much as we can.”
While big expenses such as housing and child care payments are often fixed, other costs, especially food, fluctuate much more. While that means food costs can be high during months you are hosting dinners or going to restaurants, it also means you can trim them with planning meals and shopping grocery store discounts.
Decide what’s really important
Cara Macksoud, chief executive officer of Money Habitudes, a money personality assessment company, said she, her husband and five children first decide what expenses are “nonnegotiable” together. In addition to food, that might include costs related to sports or private lessons, for example.
From there, Macksoud said creatively meeting those needs by choosing less expensive options. If going on vacation is important to you, perhaps what’s most critical is being together somewhere away from everyday demands. Her family, who live in Venice, Fla., opted for a road trip together, planned partly by her children based on places they’d seen on Instagram. “We did crazy, off-the-beaten path things,” she said, such as visiting White Sands National Park in New Mexico. They had a memorable (and Instagram-worthy) day riding down the mounds of white sand on an air mattress.
Leverage community resources, social media
Erin Voisin, a certified financial planner and managing director at EP Wealth Advisors in Torrance, Calif., said she has saved hundreds of dollars on toys for her children by picking up items from local moms groups and “buy nothing” groups. “I don’t want to pay full price, so I join groups that post flash deals or giveaways,” she said.
Voisin has found ideas for free activities from Facebook groups, such as taking your kids to a pet store to look at the animals.
For families struggling to buy essentials, the website 211.org can help them find local food banks as well as bill-paying assistance.
“Prioritize the roof over your head, food, a way to get to work and utilities,” Bryan said. “Everything else will fall into place.”