Creating a sustainable budget for our family of 3 is one of my ongoing duties as one-half head of the household. Our happiness, flexibility, and ability to put food on the table all comes down to what every penny is doing. It’s easy to get trapped into the paycheck-by-paycheck life cycle and difficult to get out, but somehow we have been lucky enough to manage our finances in a way that allows us to save and spend a reasonable amount without worrying about that next paycheck.
I’m going to share some of our top tips for managing your money in a way that will give you that same flexibility and sustainability.
*Before I do, I want to acknowledge the privilege that has allowed us to get to where we are. There are many people who won’t acknowledge the help they’ve received, thus making financial progress seem unattainable to those who don’t have the same privileges. In our situation, we received housing support from our family after our wedding. That has made a huge difference in our savings rate, but even before we had that support, we did employ the same tips we are going to share below.*
First Step Towards Budgeting: Pay Down Debt
Our first tip is so so so important. Before you can have flexibility and sustainability in your budget, you have to unburden yourself of debt. Any debt you carry is an albatross around your financials. The longer you take to pay off debt, the more money you lose – both in interest paid on that debt, and interest lost on money you could have been putting into investments instead. Now, paying off debt can take a really long time and can be very challenging when you’re already living on a small income. We would forgo things we wanted for a while as we paid off our car loans a few years ago. It was so hard but it was so worth it to feel that chain being lifted once everything was paid off. And if you have multiple debts, it’s recommended by many financial professionals to pay off the smallest first and snowball your way up to the biggest debt.
What is an Emergency Savings?
Once we paid down our debt, we really focused on building our emergency savings. We personally have more than 6 months of expenses saved in order to prepare for any crazy life change – especially knowing all the crazy dreams we have! However, starting with just $1,000 is more than enough to start off with while you work on building your budget. Having this emergency savings is so important and will protect you in the off chance something surprises you financially.
How To Get Started On Creating a Budget
When it comes time to actually build out our budget, I go old school. I’ve been known to pull out all my statements (debit, credit, investments) for each month and tally up our spending manually. For a while when we first started building our budget, this was my preferred way to do it because it really gave me a chance to get familiar and actually feel the impact of all of our spending. It’s easy with non-tangible money (credit cards) to overspend because you’re just not physically aware of the money leaving your wallet. I personally used Google Sheets to keep track of our spending. After a while of getting used to our normal outflow of cash, I moved over to Mint to let go of some of the heavy lifting. I’m aware of every penny that comes in and out of our household. While that may seem really overwhelming to some, it’s actually really reassuring to me. I know the value behind every cent to my name and that gives me the confidence to make the financial decisions I need to for my family.
The Secret to a Successful Budget
Now that you are aware of where your money is going thanks to the handy budgeting tools provided above, it’s time to take a look at what you are actually spending your money on. This is where budgeting gets really hard. You have to be able and willing to look at your spending and honestly tell yourself which of your expenses is actually needed, versus which are just wasteful. You may have to take a step back here and look at who you are as a person and maybe what society has been telling you in the past. Do you need to spend $200 on a haircut every two months? Is it absolutely necessary to spend $500 on new clothes twice a year? Do you need 5 different streaming platforms? These are the hard questions, people. Yes, we all want these things. We all want to live a life of luxury and enjoy our disposable income. But at the end of the day, if you’re looking to create a flexible and sustainable budget for your family – the question is what are you willing to give up?
Here’s a Sample Budget For Our Family of 3
One last thing I would like to point out is that to create a sustainable and flexible budget, you don’t necessarily have to always break even on your numbers. Sometimes you’re going to go over, sometimes you might come under. The best part about being able to be flexible with your financials is that you can adjust as you learn more about who you are and what you can accommodate.
I hope this was helpful in figuring out how to start your own family budget! Subscribe to our blog to get more financial tips and updates like this!