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Creating a family budget can be a daunting task that gets pushed aside time and again. But having a family budget is essential to understanding your household’s financial health and taking control of your money.

I set up a household budget for my family over a decade ago, and I wouldn’t be without it. I will share my knowledge of setting up and tracking a family budget so that I can guide you through creating your own budget. 

How to set up a family budget
Beginners guide to creating a family budget


With rising costs and expenses, it’s becoming increasingly important for families to create a budget and learn how to stick to it.

A budget will help ensure you have enough money for everyday needs such as groceries, bills, and occasional items like family holidays or unexpected expenses.

Creating a successful family budget does take some time but can be broken down into manageable steps.

So here is my guide to get you started on creating a budget for your family so you can have better control over your money and financial decisions.


First up, let’s look at what a family budget actually is. I know from speaking to friends and extended family that the very mention of the word ‘budget’ can bring some people out in hives. It all sounds so dull and difficult. 

But the reality is that running a budget is actually very straightforward. You don’t need a Maths degree.

You need to get yourself organised. The first step is to decide on the budgeting method that works best for you (top tip: keep it as simple as possible).

The second step is to determine how you will keep track of your budget. 

Lastly, you must ensure that keeping track of your family budget becomes a habit. A budget is never set-it-and-go; it needs to be actively managed. 

To recap the steps to successfully creating and keeping a budget:

  1. Decide on a budgeting method
  2. Decide how to track your budget
  3. Make regular budget check-ins a habit

Got it? Let’s now get it really clear what a budget is and the purpose of having a family budget. 


A family budget is a plan for your money.

It is one of the most important elements of admin that you can do for your family. I have been keeping a budget for the last decade, which has helped ensure my family and I stay on track with our finances.

Even if we have a period when our budget is squeezed, we can work our way around any issues and have always managed to avoid financial difficulties.


Having a family budget is an important step towards financial success. Not only will it help you to understand better where your money is going, but it can also help you to get everyone in the family on the same page about money.

A family budget can be a great way to open up lines of communication and show that money isn’t taboo.

When you have a family budget, you’ll stop wondering where your money went and start telling it where to go.

You’ll be able to set goals for yourself and your family, such as saving for college or retirement or paying off debt.

You’ll also be able to track spending habits to make adjustments if needed.

Having a budget will give you more control over your finances and help ensure that everyone in the family is on the same page regarding spending and saving.


Here are some of the main benefits of having a family budget for your household

  1. Increased financial control: Having a budget allows individuals and families to track their income and expenses better and make adjustments as necessary to stay within their means.
  2. Improved savings: By identifying and prioritizing savings goals, a budget can help individuals and families save more effectively for emergencies, retirement, or major purchases.
  3. Reduced debt: A budget can help individuals and families reduce overall debt by keeping expenses in check and paying down debt.
  4. Improved communication: Creating a budget can be a great way for families to have open and honest conversations about money and ensure everyone is on the same page regarding financial goals and priorities.
  5. Better decision-making: Having a budget in place can help individuals and families make more informed decisions about their money, as they will better understand their financial situation and what they can afford.


Now you are very clear on what a budget actually is and what the benefits of budgeting are, let’s take a look at some of the main budgeting methods that are popular for family budgeting, 

There are several different types of budgeting methods. Here’s a list of four of the main types and a little information about each of them.

Have a read and decide which of these budgets could work best for you and your family.

If you find it hard to decide, you could also look at combining elements from each to create your budget.

Ultimately the best budget for you is the one that is easy for you to manage and easy for you to stick to using.


The envelope budgeting method is one of the oldest and simplest forms of budgeting. This method involves allocating a certain amount of cash to each budget category and placing the money in an envelope labelled with the corresponding budget category.

Envelope method budgeting categories include, for example, mortgage/rent, groceries, transport costs, and entertainment. 

The envelope method was originally created using cash instead of credit or debit cards. However, it is possible to adapt this method to use a credit card, which is very simple. As long as you are disciplined. 


To use the envelope method with credit cards, set a total amount for each category in your budget and stick to it by only using your credit card to make purchases within that budgeted amount. 

This means you will need to track your credit card spending very regularly. This is incredibly easy to do these days as so many credit cards and banks that provide credit cards have apps that make it super quick to check. 

The cash envelope budget method
The cash envelope budget method


Zero-based budgeting method is a great way to ensure that all your income is allocated to some purpose. It involves taking your total income and subtracting all your expenses, so the result should be zero.

This doesn’t mean you are spending all of your money, but rather that you are being mindful about where it goes rather than spending on unnecessary items.

For example, if your income is £3,000 per month, you may spend £2,000 on necessary items like rent and groceries while putting the remaining £1,000 towards savings goals such as an emergency fund or retirement.

Using a zero-based budgeting approach, you can ensure that every part of your income goes towards something important. By doing this, you can identify areas where you might be overspending and adjust your budget to align it with your financial goals better.

It’s important to note that zero-based budgeting requires consistent monitoring and updating of the budget as expenses and income change.

It is also important to understand your expenses and ensure you have included them in your budget.

You can also use this method to track how much money you have left each month for discretionary spending or investing in other areas, such as stocks or mutual funds. 



The first step is to list your income. This includes any money coming in from paychecks, side hustles, freelance work, or other sources of income.

If you have an irregular income, make sure to put the lowest estimate of what you normally drive in this spot so that you can adjust later if needed.

Once all your income sources are listed, it’s time to move on to the next step: tracking expenses.


The second step is to list your regular expenses. The main expenses are usually utilities, housing and transportation. These are fixed costs because they stay around the same every month (like your mortgage or rent). Other fees may change from month to month, like groceries or entertainment.

To help you estimate your expenses, open up your online bank account or look at your bank statement. This will give you an idea of how much money you’re spending each month and where it’s going.

Once you understand what you’re spending on your regular expenses, you can allocate for other expenses like savings goals and debt repayment.


The final step in the zero-based budgeting method is to subtract your expenses from your income. This should result in zero money left over because every bit of your income has been allocated to a specific purpose.

If any money is left over, you can allocate it to something useful like debt repayment, savings, overpaying on your mortgage or investing. Ultimately you want to end up with zero income left unaccounted for each month. 


A cash flow budget is a budgeting method that focuses on tracking the inflow and outflow of cash in a given period.

This method involves forecasting the amount of cash that will be received (inflow) and spent (outflow) in the future and comparing the two to ensure enough cash to cover all expenses.

Cash flow budgeting is particularly useful for people and families with irregular income or expenses, as it helps them plan and prepare for times when cash may be tight. It also allows you to identify potential cash shortfalls in advance and take action to prevent them.



The first step to creating a cash flow budget is to list your expected income for the budget period. For example, salary, investments, and any other sources of income.


The second step is to list your expected expenses for the budget period. For example, rent or mortgage payments, utilities, transportation, and other fixed and variable expenses.

STEP 3: 

Once you have a complete list of income and expenses, you can subtract the expenses from the income to determine your net cash flow.

If the net cash flow (the amount of income left after you subtracted expenses) is positive, you will have extra cash at the end of the budget period.

If the net cash flow is negative, you will have a cash deficit and need to find ways to either increase income or reduce expenses to balance your budget.

It’s important to remember that a cash flow budget is a forecast, not an exact representation of what will happen and to regularly review and update your budget as expenses and income change.

Cash flow budget method
The cash flow budget method works on predicting future income and outgoings.

4. THE 50/30/20 BUDGET

The 50/30/20 budget method is great for getting your finances in order. It’s simple, making it easy to understand and follow.

The 50/30/20 budgeting method involves allocating 50% of your family income for essential bills. For example, your mortgage, insurance, and utility bills.

30% is for non-essential spending, otherwise known as recreation, fun or even luxury.

20% is for debt repayment or saving. This budget can be more manageable for families since it’s not as strict or time-consuming to plan and review.

The 50/30/20 budget method is also beneficial because it encourages saving money while still allowing you to enjoy some luxuries.

By allocating 20% of your income towards savings or debt repayment, you can build up an emergency fund or pay off any outstanding debts that may be weighing on your finances.

Additionally, the 30% allocated towards ‘fun’ spending allows you to enjoy life without feeling guilty about overspending.

This budgeting method makes it easier to stay on track with your financial goals while still enjoying the things that make life enjoyable.


  • Envelope budgeting: This is a physical budgeting method. The goal is to stick to the budgeted amount for each category and avoid overspending.
  • Zero-based budgeting: This is an allocation budgeting method. The focus is on allocating income to expenses and ensuring that there is zero balance at the end of the budget period.
  • Cash flow budgeting: This is a budget tracking method. The goal is to ensure enough cash is on hand to meet expenses and identify and plan for potential cash shortfalls. This method is good for those with irregular income. 
  • 50/30/20 budgeting: This is also an allocation budgeting method. The goal is to balance spending on necessities and enjoying life while saving and paying off debt.
How to track your budget, how to track family budget, budget tracking methods, use pen and paper to track budget
Decide how you will track your budget


Once you have decided what budgeting method to use, you will need to determine how to keep track of your budget.

This is one of the most important decisions you will make because this is how you ensure that you stay in control of your budget month in and month out.

A budget tracking system is essential to stay on top of your finances. Without one, it’s easy to lose track of where your money is going and how much you’re spending.

There are two main options: paper or electronic. Electronic tracking systems can be as simple as a spreadsheet or as high-tech as using a budgeting app.

Here’s some information on different ways to keep track of your family budget. 


Paper budgeting tools such as an accounting ledger and a budget calculator can be just as accurate as electronic ones, but they require more manual work and can be prone to errors. On the other hand, electronic budgeting tools make tracking finances much easier and reduce errors due to automated calculations.

Ultimately, it comes down to personal preference. Paper budgeting tools may be the way to go if you prefer a more hands-on approach. However, if you want something that’s easier and faster to use, then electronic budgeting tools are probably your best bet. Whichever option you choose, ensure it fits your lifestyle and helps you stay on top of your finances.


An Excel spreadsheet or Google sheet is a popular and good way to keep track of a family budget It’s easy to read and can be colour-coded for better organization.

Spreadsheets are easy to use, can be customised to fit your needs, and allow you to analyse numbers quickly.

Spreadsheets are user-friendly and can be used by anyone with basic computer skills. In addition, they provide an organised view of your financial information, making tracking your spending and income easy.

I currently use a Google sheet to track my family budget. I am keen to try using a budgeting app, but for the moment, I find that using a Google sheet is really straightforward and easy to manage. 

best budgeting apps, best budgeting apps US, best budgeting apps UK
Some of the most popular budgeting apps (US/UK)


Another option for tracking your budget is to use a budgeting app. These apps are designed to help you manage your finances and stay on top of your budget.

A budgeting app can be an effective way to stay organised and on top of your finances. Budgeting apps are easy to use, can be customised to fit your needs and provide helpful features such as budget tracking, bill reminders, and spending analysis.

Budgeting apps also allow you to sync your accounts so that all your financial information is in one place. This makes it easier to track your spending and income over time.

Once you’ve set an app up, it will take a lot of the hard work out of keeping track of your budget. 

There are a number of apps that either offer budgeting as part of their service or are solely for budgeting. 

Here is a roundup of some of the best US and UK budgeting apps. 


Some of the best budgeting apps in the US include


Mint budget tracker is a free online budgeting tool that helps users track their spending, set financial goals, and create a budget.

Mint also offers personalised advice and tips to help users stay on track with their budgets, including budget tracking, goal setting and budget creation. It also provides an easy-to-use interface that allows users to quickly and easily view their finances in one place.

YNAB (You Need A Budget)

YNAB (You Need A Budget) is designed to help families create and manage their budgets.

YNAB has a four-step approach to budgeting: 1) Give Every Dollar a Job; 2) Embrace Your True Expenses; 3) Roll with the Punches; and 4) Age Your Money.

It also provides users with budgeting tools such as budget tracking, goal setting, and creation. In addition, YNAB offers personalised advice and tips to help users stay on track with their budgets.


PocketGuard allows users to connect their accounts, including bank accounts, credit cards, loans, investments, and more.

PocketGuard then automatically categorises transactions and provides an overview of spending habits.

Users can set up budgets for each category and receive notifications when they are close to exceeding them. The app also offers personalised advice and tips to help users stay on track with their budgets.


EveryDollar is a budgeting app created by Dave Ramsey. The app allows users to easily track their income and expenses, set goals, and plan for the future.

EveryDollar also provides helpful tips and resources to help users stay on track with their budgets. The app lets users quickly see where their money is going each month and adjust as needed.


In the UK, various budgeting apps are available to help you manage your finances and create a family budget.


Money Dashboard is a free budgeting tool that helps families create and manage their budgets. It allows users to track their spending, set financial goals, and get personalised advice on how to save money.

The app also provides insights into where users spend the most money so they can make informed decisions about their finances. 


The Emma budgeting app is a powerful tool for creating and managing family budgets. It allows users to easily track their spending, set up budgets, and get notifications when they are close to exceeding their budget.

The app also provides insights into spending habits, helping users identify areas where they can save money.


Cleo provides an easy-to-use interface for tracking expenses, setting goals, and monitoring progress. In addition, the app offers personalised advice and insights to help users make better financial decisions.

The app asks users to enter their income, debts, and other financial information. Then, this data is used to create a budget tailored to the user’s needs.

Cleo also offers features such as bill reminders, budget alerts, and debt tracking. 


Moneybox provides an easy-to-use interface that allows users to quickly set up their budget, track spending, and save for the future.

With Moneybox, users can easily categorise expenses, set spending limits, and monitor progress towards financial goals.

The app also offers helpful features such as automatic savings transfers, bill reminders, and budget alerts.

Now that you know the budgeting method and how you will keep track of your budget, let’s look at how you can best prioritise your budget. 

how to prioritise family budget, categories for the family budget, categories for budget, categories for personal budget
Prioritise your family budget


One of the most important reasons for having a family budget is to ensure your family’s financial security. The best way to do this is to prioritise your budget. Here is a quick guide on how to prioritise. 


The first step in prioritising a family budget is determining what expenses are essential and which ones can be cut back on or eliminated.

First up is essential expenses. These are the expenses that have to be met without fail. Examples of essential expenses include rent or mortgage payments, utilities, food, and healthcare. 

Once you have determined what expenses are essential, you can look at other items that may not be necessary but are still important to your family’s financial security. These could include things like car payments, insurance premiums, and savings.

Finally, you can look at items that are not essential but may still be important to your family’s financial security. These could include things like entertainment, vacations, and luxury items. It is important to remember that these items should only be included in your budget if you have the funds available after taking care of all of your essential expenses.

Here is a quick list of categories families typically need to include in a budget. 


  1. Housing: including mortgage or rent, property taxes, and insurance
  2. Food: including groceries, dining out, and meal planning
  3. Transportation: including car payments, gas, and insurance
  4. Utilities: including electricity, gas, water, and internet
  5. Health care: including insurance, doctor visits, and medication
  6. Debt repayment: including credit card debt, student loans, and personal loans
  7. Savings: including an emergency fund, retirement savings, and short-term savings goals
  8. Insurance: including health, life, and property insurance
  9. Personal expenses: including clothing, entertainment, and hobbies
  10. Child-related expenses: including child care, education, and extracurricular activities

By prioritising your family budget, you can ensure that your family’s financial security is taken care of and that you can meet all of your financial obligations.


Generally speaking, it is best to prioritise paying off debt first, as this will help free up more money for other financial goals. Once any high-interest debt is paid off, you can start saving and investing.

It is important to remember that saving, paying off debt and investing all have their place in a family budget. The key is to prioritise these activities based on your financial situation and goals.

Saving money should be a priority for anyone looking to build financial security. An emergency fund is essential in case of unexpected expenses or job loss, and it’s recommended to keep enough money saved to cover three to six months of expenses.

Once an emergency fund is established, start regularly contributing towards retirement savings. Automating your contributions can help ensure you stay on track with your savings goals.

Retirement savings are also important, and workplace pensions/workplace 401(k) accounts and IRAs offer tax incentives to help you save more.

In addition, many employers will match employee contributions up to a certain percentage, so it’s important to contribute at least enough to receive the full match. This free money is too good to pass up, so make sure you don’t miss out on any potential matches from your employer.

Once you have an emergency fund in place and have covered retirement savings, you can also look into other investment options, such as stocks or mutual funds, if you want more control over how your money is invested.

With careful planning and dedication, building a strong savings plan will help ensure financial security in the future.


Creating and sticking to a family budget is an important part of financial planning. It can help you manage your money, save for the future, and avoid debt.

However, life is unpredictable, and sometimes you must adjust your budget when unexpected expenses arise or your income changes.

When adjusting your budget, start by assessing your current financial situation. Look at how much money you have coming in and going out each month and determine where you can cut back.

You may need to make some tough decisions, but it’s important to prioritize your essential expenses first. Once those are taken care of, you can look at other areas of your budget that need to be adjusted.

Finally, remember that budgeting is an ongoing process, and you should review your budget regularly to ensure it still meets your family’s needs.

Speaking of family needs, it can be really beneficial to involve your family in the budgeting process. At the very least, you should get your husband/wife/partner on board. 

Family budget, how to budget for your family, how to set up a family budget
Get your family involved with the budget


Including your husband/wife/partner in the budgeting process is important. It can also be really good to involve older kids so everyone knows the budget and their role in helping it succeed.

Here are some tips for getting your partner or your entire family on board with a family budget:

1. Explain why you’re creating a budget

Start by explaining why you’re creating a budget and how it will benefit the family. Then, talk about how it will help everyone reach their financial goals and ensure everyone understands the importance of sticking to the budget.

2. Get input from everyone in the family

Involve everyone in creating the budget by asking for their input on what expenses should be included and how much money should be allocated to each category. This will help ensure that everyone is on board with the budget and understands their role in helping it succeed.

3. Set realistic goals

Set realistic goals for the family budget that everyone can work towards together. Then, make sure that everyone understands what they need to do to reach those goals and how their actions can affect the overall success of the budget.

Creating money goals together is an important step in managing finances as a family. It helps to ensure everyone is on the same page and working towards the same objectives.

  • Family financial goal examples:
  • Paying off credit card debt
  • Saving an emergency fund
  • Saving for a family holiday
  • Saving for a family car
  • Investing for retirement

When setting these goals, discussing how everyone can make them come true is important. This could include budgeting, cutting back on spending, or increasing income.

Families can work towards achieving their financial objectives more efficiently and effectively by having an open dialogue about money goals and coming up with a plan of action together.

Everyone should have a role in the process so that they feel like they are contributing to the success of the family’s financial future.

Setting money goals together also helps to keep everyone accountable and motivated to reach their desired outcomes.

With clear communication and collaboration, families can create achievable money goals to help them achieve their financial dreams.

4. Monitor progress regularly

Monitoring progress towards financial goals is important to stick to a budget. Make sure that everyone in the family knows how they’re doing and what they need to do to stay on track. This will help ensure that everyone is working together towards achieving their goals.

5. Get everyone on board with ‘wants’ versus ‘needs.’

Creating a family budget is an important step in managing your finances. It can help you stay on track with your spending and ensure that you can meet all your financial obligations.

One key element of creating a successful budget is understanding the difference between wants and needs.

Needs are essential items or services for survival, such as food, shelter, clothing, and medical care.

Wants are items or services that are not essential for survival, such as entertainment, vacations, and luxury items.

Discussing the difference between wants and needs with your family can help everyone understand why it’s important to stick to a budget and prioritise spending on essential items.

6. Have monthly budget meetings

Monthly budget meetings are an essential part of managing your finances. They provide a great opportunity to review your spending and saving habits, set goals for the upcoming month, and ensure you’re staying on track.

Before each meeting, reviewing your income and expenses from the previous month is important. This will help you identify any areas where you may have overspent or underspent, as well as any unexpected expenses that may have come up.

During the meeting, it’s important to discuss these issues in detail and develop solutions to ensure that you stay within your budget for the upcoming month. Celebrating successes from the previous month and setting realistic goals for the next one is also important.

Finally, ensure that meetings don’t run too long so everyone can stay focused on the task.

Regular monthly budget meetings allow you to keep yourself accountable and ensure that your finances remain in order throughout the year.


Creating a family budget is important for managing your family finances and achieving financial stability.

Setting a budget allows you to track spending and ensure you live within your means. A budget also helps to ensure that you save for the future and meet your long-term goals.

Creating a family budget requires some planning and dedication, but it doesn’t have to be daunting. If you give yourself the chance, you can learn how to create a budget that works for you and your family.

By following the simple family budgeting tips I have outlined, you can take control of your family finances once and for all.