When it comes to managing your family’s finances, knowing how to make a family budget is crucial.
Without a budget, you’re prone to fall into the trap of overspending, getting into debt, and ultimately living paycheck to paycheck.
None of these things will lead you to the financial freedom that you deserve and desire.
The only way to avoid these financial pitfalls is to get on a family budget that works for you and that you can stick to.
If you’ve never created or stuck to a budget before, it can be intimidating.
But once you get the hang of it, I assure you that you’ll never want to handle money without it!
In this post, I’ll walk you through how to create a family budget for your family step-by-step.
The importance of a family budget
Ultimately, having a family budget puts you in control of your finances. When you budget, you plan where your money is going so that you’re able to spend it more wisely.
More importantly, having a budget allows you to plan for the life that you truly want.

1. It helps reach your financial goals
Utlimately, your budget is a reflection of your financial goals.
For example, if your goal is to pay off debt, then you’ll allocate money in your budget for debt payoff.
At the end of the day, a budget is simply a plan for your money. It’s a plan to help you navigate life and to reach your goals.
Having a budget allows you to see how much money you can put towards these goals and create a timeline to achieve them.
2. It helps you plan for the life you want
Ultimately, budgeting helps you plan for the life that you want.
Without money, you may not be able to do many of the things that you may desire to do. So making sure your finances align with your life goals is important.
The way to do that is by budgeting.
If you want to travel, you can budget for it. If you want to buy a house, you can budget for it. If you want to have your dream vacation, you can budget for it.
A budget is not only at the center of your financial goals, but also your life goals. That’s why having one can help you achieve them.
3. It gives you control of your finances and financial freedom
One of the intrinsic benefits of budgeting is that you have control over your finances.
When you budget, you are telling your money where it needs to go. You have complete control over how your money is spent and what you put it toward.
Contrarily, when you don’t have a plan for your money it can control you. This means that you can end up spending above your means and even get into debt.
This takes away your financial freedom and your money now controls your life. So if you want financial freedom, it begins with budgeting your money.
4. It reduces arguments about money with your spouse
It’s no secret that arguments about money is one of the leading causes of stress in relationships. Ultimately, these money disagreements can end in divorce.
Although there are many things that can contribute to financial disagreements in relationships, a budget can help you get on the same page when it comes to how you manage your money.
Having a shared budget puts (and keeps) you on the same page as your spouse when it comes to your financial priorities and spending.

How to Create a Family Budget
So now that you know why it’s important to create a family budget, it’s time to actually make one. Here’s how!
1. Determine your financial goals
So before you even create your budget, you need to determine what your family’s financial goals are.
If you’re stumped on what that should be, here are some ideas:
- Pay off debt and become debt-free
- Save money for child’s college tuition
- Pay off mortgage
- Save money for a vacation
- Save to pay cash for a car
Those are just a few ideas to get your brain going.
Ultimately, you’ll want to determine your goals with your spouse and make sure that you’re on the same page.
2. Review income and expenses
After you have established your financial goals, the next thing you need to do is to review your income and expenses.
Your income is every dollar that is coming into your household.
Calculate what that is on a monthly basis. This is how much money you have to cover your expenses each month.
Do not include credit card limits. That is an expense, not income.
Typically, your expenses are the same month to month.
For example, your cable bill will likely not change between months, nor will your mortgage.
To get a good understanding of how much you actually spend, download your past 3 months’ bank statements. Use them to identify what you spend money on a monthly basis and how much your expenses sum up to be.
Is it more than your income?
For most families it is and they aren’t even aware. That’s how they stay in the cycle of being in debt and living paycheck to paycheck.
Budgeting will help you see this in advance so that you can make adjustments to your spending.

Budget Categories
There are two main categories when it comes to budgeting. The first is your income and the second is expenses.
When budgeting, you need to consider all of your income sources, not just your job. This would include large windfalls of money, such as a tax refund or bonus, passive income, alimony/child support, and any miscellaneous income (gifts, refunds, etc.). You’ll also want to include any side hustle income that you or your spouse make.
You are accounting for every dollar that comes into your household, so all income needs to be included.
Expenses will vary by household; however, there are some general categories that your expenses will fall into.
- Giving
- Saving
- Housing
- Utilities
- Food
- Insurance
- Personal Development
- Personal Care
- Debts
- Children
- Clothing
- Transportation
- Medical/Health
- Household Items
- Recreation/Fun
Within these categories, you can get even more granular. In fact, our budget has about 90 line items of expenses that we use throughout the year.
You don’t have to get that specific, although it brings greater visibility to what you’re spending on.
3. Decide on a budgeting method
Once you’ve reviewed your numbers, it’s time to decide on a budget method going forward.
The two most widely used budgeting methods are the zero-based budgeting method and the 50/20/30 budgeting method.
What is a zero-based budget?
The concept of a zero-based budget is quite simple.
Let me explain…
This budgeting method requires that you designate how each dollar of your income will be used.
For example, if your income is $5,000 per month, you will need to identify how that $5,000 will be used—down to the last penny.
This doesn’t mean that every penny of your income has to be spent.
Some of the money can be allocated toward saving, investing, or paying down debt.
Ultimately the idea is that every dollar has an assignment.
The term zero-based is derived from the fact that when you subtract all of your expenses and allocations from your income, the difference should be zero in your budget.
This means that you’ve successfully assigned every penny of your income to something. You’ve planned, in advance, how the money will be used.
With this budgeting method, there are no guidelines on how much money you should spend on each budget category.
As long as your expenses do not exceed your income, then you can allocate your funds wherever they need to go based on your financial goals.
However, if you need help determining how to allocate your spending, there are some recommended budget percentages that you can go by.
What is a 50/20/30 budget?
The 50/20/30 budgeting method is an easy rule of thumb way to allocate your spending.
This method suggests that you allocate 50% of your income to needs, 20% to savings, and 30% to wants.
So let’s go back to the $5,000 per month income example.
In this case, you would allocate your income in the following way:
$2,500 – Needs
$1,000 – Savings
$1,500 – Wants
I’m sure you’re wondering what constitutes a need or want and what you should be saving for.
Needs are things that you need to survive.
This would include your shelter, transportation, food, utilities, insurance, and health care costs. Debt repayment would also fall under this category, as it is a financial obligation.
As you might have already guessed, wants are those things that aren’t necessary to survive.
This includes personal care, entertainment, and discretionary spending.
Lastly, the saving referred to in this method includes retirement savings and your emergency fund. It can also go toward your long/short term savings goals or travel fund.
Contrary to the zero-based budgeting method, the 50/20/30 budgeting method gives guidance on what you should spend, although it certainly does not mean that you have to spend that exact amount.
Dave Ramsey Household Budget Percentages
Dave Ramsey’s budget percentages are also widely used when creating a family budget.
Below is his rule of thumb for how to allocate your funds across your expenses.
- Giving – 10%
- Saving – 10%
- Food – 10-15%
- Utilities – 5-15%
- Housing – 25%
- Transportation – 10%
- Health – 5-10%
- Insurance – 10-25%
- Recreation – 5-10%
- Personal Spending – 5-10%
- Miscellaneous – 5-10%
4. Create your budget
Now you can get into actually creating your family budget.
Regardless of which method you choose, the process for creating your budget is still the same.
- List your income
- List your expected expenses for the month or pay period
- Compare your income to your expenses (ie. Do you have enough money to cover them?)
- Make adjustments to your planned spending
- Track your spending in real time
- Review
Template for Family Budget
How you choose to budget it completely up to you and what works for your family.
You can create a budget in a spreadsheet or you can use a budget printable. Either way, you should have a simple way to budget so that it doesn’t become overwhelming or seem like a chore.
You can grab your free copy of my budget printable below to get started!
How to stick to your family
Ultimately, managing a family budget comes down to one thing: communication.
It’s communication with your spouse about your financial goals, spending, and deviations from the plan.
To facilitate that discussion, I recommend having a family budget meeting to review the spending plan for the month. It is also the time to discuss if additional funds are needed for special occasions and events.
Your family budget meeting should include:
- How well you did to last month’s (or pay period’s) spending plan
- Expenses that you need to account for in the coming pay period or month
- How you are trending toward your financial goals (ex. Paying off debt, saving for a vacation, etc.)
Your budget meeting is a great opportunity to include your children in the discussion about money and to teach them about budgeting.
In addition to having a budget meeting, you’ll need some sort of medium to share and update the budget with your spouse.
My husband and I prefer using a spreadsheet that we can both access. However, there are apps that you can use to help with budgeting as well.
Final Thoughts on Making a Family Budget
Having a budget is paramount to your financial success. You should always have a plan for your money and the way to do that is through budgeting.
Don’t be intimidated by it.
Creating a family budget really isn’t as hard as you think.
Find a budgeting method that works for your family, stick to it, and you’ll find financial success!