How to Budget for a Family of 5: Our Step by Step Guide

budget for family of 5 (2)

Between paying for utility bills, groceries and general living costs as a family of 5, the dollars can quickly disappear.  

But you don’t need to struggle financially.

There are ways to help you control spending and live comfortably regardless of the figures on your paychecks.

It’s time to start a budget for a family of 5 that actually works. Follow our step by step guide to make your money go further and save money each month.

budget for family of 5

How to budget for a family of 5

1.       Create a monthly budget

The first step to successfully living on a budget is to track your family’s monthly income and outgoings.

Gather recent paychecks, bills and bank statements so that you have a clear picture of how much comes in compared to what goes out.

Highlight areas that you are overspending on, or could easily cut back on to save money.

Next, create a list of spending categories such as mortgage/rent, groceries, travel, and entertainment.

Allocate a budget for each spending area that is realistic and based on your current spending habits.

2.       Set financial goals

You don’t need to neglect your short-term or long-term goals just because you’re budgeting.

In fact, saving should be one of your priority categories that form your monthly budget.

Whether you want to save for your next family vacation or put some money aside for your children’s college fund, having clear goals can help you meet them.

Simple short-term goals such as reducing your cable bill is a great way to save more money each month.

Setting financial goals will also dictate how much you need to save to achieve your goal.

If you find saving difficult, consider using a money app such as Mint that will automatically take a set amount of money from your bank account every month.

3.       Get out of debt

If you’re living on a tight budget, paying off debt may feel like a distant dream.

However, adding a debt management plan into your budget should be a priority to reduce the amount of interest you pay overall and free up the income that is being spent on repayments sooner.

Compile a list of your debts, including credit cards, store cards or loans. Add up the total and work out how much you need to pay off each month to clear your debts in the shortest period of time achievable.

Paying off the minimum will take you longer, so if you can pay slightly more it will save you money in the long term.

Focus on paying off the debt that has the highest interest rate first.

4.       Control your spending on food

Just because you’re on a budget, doesn’t mean you have to stop eating healthy.

You can eat nutrient-rich foods without spending a fortune, if you know how.

Learning to cook from scratch is an effective way to feed your family on a budget.

Simple ingredients cost less than ready-made food, and are better for you.

Buying ingredients that are in season is another top tip to make your grocery budget for a family of 5 go further.

Snacks are expensive, so minimize them wherever possible or opt for fresh fruit or vegetables as a cheaper and healthier alternative to crisps and soda.

Planning your weekly meals will help you stick to your grocery budget and stop you from adding items to your trolley that aren’t on the list.

Don’t forget to freeze any leftovers or use them for lunch the next day.

If you like to eat out, find some ‘kids eat free’ deals at restaurants in your state to give you a break from cooking that won’t bust your budget.

Sample grocery list for a family of 5 on a budget

A carefully planned grocery list will prevent you from buying items you don’t actually need, helping you keep to your budget.Use the list below as a guide and adapt it to suit your family meal plan.

Bakery and bread (whole wheat bread, pittas and tortillas)

Meat and seafood (Chicken or turkey breasts, salmon, mackerel or trout)

Pasta and rice (whole wheat pasta and brown rice)

Condiments (ketchup, mustard, barbecue sauce, peanut butter, olive oil or cooking spray)

Breakfast foods (multigrain cereals and oatmeal)

Canned items (tomatoes, tuna, tinned vegetables)

Dairy (eggs and cheese)

Fresh produce (fruits and vegetables)

Drinks (soda, squash, tea and coffee)

5.       Cut costs in other areas

If you’re currently living paycheck-to-paycheck, cutting household expenses can help you live a more financially secure life and allow you to save for things that matter to you the most.

Here are some ideas to significantly slash your outgoings.

Use your car less: if you can walk or take public transport to do the school run or travel to work, you could save yourself a ton of money each year.

Stop eating out: eating out is expensive for large families. Instead of dining at restaurants, eat at home more or host dinner parties for friends and family.

Get rid of cable: basic cable packages cost $20-$25 a month.

Cancel your subscription and do some research on what channels are broadcast for free in your area, you may be pleasantly surprised.

If you have a mid-premium cable package, save money by downgrading to the basic package.

Buy used items: you can save some serious money by buying used clothing, furniture and other items.

Use the money you save to put towards achieving your financial goals.

Cancel subscriptions: do you actually use those monthly subscription boxes that eat away at your income? Go through your subscriptions and cancel the ones you don’t use.

6.       Save for the future

Saving gives you greater financial security. If an unexpected cost comes up such as car or home repairs, you have money to fall back on without relying on your credit card.

Goals are an important part of saving.

If you know what you’re saving for, it’s much easier to part with some of your hard-earned cash each month.

Having both short and long-term goals will keep you motivated to save money.

Opening a savings account is a great way to boost your savings efforts. Over time, saving money becomes a habit that forms part of your monthly budget. You won’t even notice the nice pile of money building up.

What will you save for first? A holiday, new car, new home or your children’s future education? The possibilities are endless.

A sample budget for a family of 5

The average monthly expenses for a family of 5 is $5,102, according to data from the latest Bureau of Labor Statistics report. How do your outgoings compare?

Mortgage/rent – $1,674

Transport – $813

Personal insurances and pensions – $608

Healthcare – $414

Groceries – $372

Eating out – $288

Entertainment – $269

Savings – $157

Apparel and services – $156

Education – $117

Personal care – $64

Total spending – $5,102

Your average may vary, so don’t worry if your rent/mortgage is more but your grocery bill is less.

Your spending will be impacted by the cost of living in your state, how much debt you have and other factors.

Looking at averages can help you identify leaks in your budget and look for ways to patch holes that could be draining your cash flow.

Successful family budgeting starts with a good plan

So now you know the steps you need to take to effectively budget for a family of 5, it’s time to put that plan into action.

Getting the whole family involved will make it less of a chore, and maybe evenWant to know more about managing your family finances? Be sure to check out our collection of resources and articles.

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