Budgeting for yourself is usually a piece of cake. When you know your exact wants and needs, sometimes you don’t even need a budget to end up fine until the next payday.
Family budgeting, on the other hand, is entirely a different ball game—mainly because you have other people to worry about. It’s not just you who’s going to starve once you fail to make ends meet.
It can be difficult because it forces you and everyone in your household to give your finances a hard look. What needs to go and what needs to stay? Let these tips help you out.
Family Budgeting Tips in the New Normal
List Down Every Expense
Before creating a household budget, you need to figure out your family’s monthly expenses first. If you feel that everyone in your family spends unnecessarily, you’ll need to sit down and talk it out.
Talk about the bills that everyone has to contribute to, just to make sure that everyone’s on the same page about it. Next, put together the expenses you all spend on a monthly basis. This list should include the following:
- Monthly Utility Bills
- Rent or Amortization
- Online Subscriptions
- Average Grocery Spendings
- Credit Card Statements
- Insurance Premiums
- Medical Expenses
- Car or Home Loan Payments
- Average Fuel Consumption
- Miscellaneous Payments
Categorize Your Expenses
It’s not enough to list down your expenses. You need to categorize them into two types: fixed and variable.
Certain expenses for a household are fixed, meaning they will arrive every month without fail. Electricity, water, internet, and amortization or rent usually take a good chunk of every family’s budget. Other expenses may include personal, housing, and car loan payments.
Meanwhile, variable expenses are the opposite. You usually spend more or less of your monthly budget to pay for these expenses, which include groceries, credit card payments, fuel expenses, and others. Expendable expenses like online subscriptions also fall into this category.
Listing every expense helps you decide which expenses are important and which ones your family can live without. This also gives you a better idea of your family’s true financial standing.
Compute Your Average Income
After listing down your expenses, determine whether your sources of income are enough to keep the lights on. You’ll want to determine monthly income based on the number of employed family members.
Here are a couple of calculations based on a household with four working members:
- Bi-Monthly Salary: As most employers use a bi-monthly payment schedule, simply add the two amounts to get your average monthly income.
- Paid Monthly Salary: Some employers pay out once a month, and this figure should stay as-is unless your monthly income varies. In this case, add up four months’ worth of income and divide it by four to get your average.
- Weekly Salary: If you’re paid weekly, take the four income totals and subtotal them. Divide that number by two to get your average monthly income.
- Fluctuating Pay: Total the last four months’ worth of income and divide by four to reach the average, but this can change if your income isn’t always the same every month. This will mean having to look at the budget over and over again each month.
Try looking for job openings and encourage yourself and other family members to take up side gigs or freelance work. Online job sites are still posting vacancies even in the new normal.
Allocate Your Income Accordingly
Now it’s time to create a budget plan for your family. Take your total expenses and subtract it to your total income. If the difference is above 0, it means your average income is enough to cover your monthly needs. If it’s beyond 0, it means you need to cut down on expenses.
To make it easier, use an Excel or Google Docs spreadsheet to map your budget. You can also download free budget templates online. Here’s a sample budget for a family of five with two working members based on a budget template from Mint.
Family Budget Sample
Total Monthly Income: PHP 50,000
Total Monthly Expenses: PHP 30,000
|Fixed Expense||Budget Allocation|
|Meralco Bill||PHP 3,000|
|Water Bill||PHP 1,500|
|Internet Bill||PHP 1,500|
|Car Insurance||PHP 2,500|
|Variable Expense||Budget Allocation|
|School Expenses||PHP 3,000|
|Grocery Items||PHP 3,000|
|Credit Card Bill||PHP 4,000|
|Online Subscriptions||PHP 1,500|
In this sample, the family still has PHP 20,000 for other expenses like entertainment, shopping, emergency, and others. Choose to spend this difference on income-generating expenses like investments, business opportunities, and other similar ventures.
Make the Situation Clear to Everyone
Not every household can afford to have more than one working family member. A single-income household can come into being for several reasons.
It can be caused by a family member unexpectedly losing their job because of COVID-19. It can also be a strategic move for a family to make sure at least one parent will stay at home with the children. Others consist of one solo parent or one able-bodied member taking care of elderly parents.
Whatever the situation is, it’s important to talk to every family member and explain why you need to make some financial adjustments to your household budget.
Maximize what you already have and build a budget that ensures all the household’s needs are met. Whether living on a single income is a temporary solution or a permanent one, what’s important is making sure that everyone understands what is going on with the household finances.
Cut Back on Your Expenses
If the difference between your monthly income and your monthly expenses resulted in a negative number, it’s time to make some adjustments to your family budgeting.
Remove some luxuries and other unnecessary expenses your family can live without. Especially if you’re a single income household, take this tip to heart. In every family budgeting session, you would need to trim some expenses in order to ensure that you have enough to pay bills, grow your savings, and fund unexpected expenses brought by the pandemic.
Cutting back on expenses doesn’t mean that the family won’t get to have fun. For example, it’s easier for single income households to prepare exciting meals without relying on food delivery apps.
Get Creative with Your Saving
There are plenty of ways to save money, especially in the new normal. If your company offers work from home arrangements, you’ll be shedding a lot of expenses that come with it. But if you’re still required to go to an office, you can pack your meals and switch to cheaper coffee.
Get your errands done all in one day to save up on gas. And to eliminate a huge chunk of fuel and transportation expenses, ride a bike or walk to your destination. You can then grow your extra savings through various ways, from starting an investment to opening an online savings account.
Take Advantage of Discounts
A budget is better served when you can save on what you already plan to spend. While extreme couponing is a foregin concept in the Philippines, there are establishments that use discount coupons to entice customers. It’s also cheaper to buy certain home supplies in bulk.
Food is generally cheaper when purchased fresh, so hit the wet market when you can. You can also haggle a little at markets, so you can save a little more. Online delivery apps like Lazada and Shopee also offer vouchers and coupons for select brands and products.
Websites like Metrodeal, CashCashPinoy, and Deal Grocer offer promos and discounts for numerous restaurants. Discounts can go up to 50% and their offers are not only limited to dining. For vacations and Christmas presents, coupon websites make family budgeting a lot easier.
Consider Getting a Credit Card
Speaking of availing discounts, another way to save money is to take advantage of your credit card’s perks. It might sound counterproductive to use a credit card as a family budgeting tactic, but it has more benefits than meets the eye, provided you choose the right credit card.
For starters, a credit card like the Citi Cashback Card can save you up to PHP 12,000 on rebates every year when you use it for grocery shopping, Meralco bill payments, and other daily expenses. Meanwhile, the HSBC Gold Cash Back gets you 5% cashback on dining spend and up to 6% on fuel purchases. Other credit cards out there can offer more perks and discounts.
To make your search a lot easier, use an online comparison platform and scout the best credit card for you. You can filter your search based on your income, your preferred perks, and other criteria.
Introduce the Concept of Sharing
This can be tricky when you have children in the family, but when you’re on a tight budget, it’s best to introduce the concept of sharing to help minimize monthly expenses.
You can start simple by having your kids share one room. This minimizes your monthly electricity bill and it allows you to get rid of unused appliances in other rooms. You can now use your extra room for your online business or work-from-home setup.
Have your kids share other things as well. For example, buy a home computer for everyone to use for their online learning. You probably don’t need to give them each a smartphone or tablet, so have them take turns using it.
You can also save on online subscriptions by availing a family plan. Services like Spotify, Apple Music, iFlix, and YouTube Premium offer affordable family and student plans for budget-conscious families.
Family budgeting doesn’t mean that everything needs to be rigid. It means that your family just needs to focus on the more important needs instead of wants. With some refinement, you’ll be able to master family budgeting and create a household budget that’s comfortable for the whole family.