Four years ago, I created a family budget that became the blueprint for reaching financial goals we never thought were possible, especially now that we are a one-income family.
Over the years, our budget has evolved, but its core value—providing security and stability—remains unchanged. No matter our income or the number of children, our budget has been a blessing through every season of life.
We’ve experienced times when we lived on a tight budget and times when our financial situation was more comfortable.
In both cases, we’ve trusted the Lord’s provision while understanding the importance of having a plan. There are times when the plan goes off track and we have to adjust, but those moments are the exception rather than the rule!
Do you often feel like there’s not enough money at the end of the month? Does the idea of budgeting feel overwhelming? Or maybe your finances are in good shape, but you want to be more intentional.
If you answered yes to any of these, this guide is here to help you create a simple and practical family budget that brings peace and eliminates financial stress.
What Is a Family Budget?
A family budget is like a roadmap that guides you to your financial goals, helping you avoid impulsive purchases and decisions that could throw you off course.
It’s not a rigid constraint but a flexible tool for everyone—whether you’re a detailed planner or a free-spirited creative.
In our home, I’m the “nerd” who loves spreadsheets, planners, and lists, but my husband values budgeting just as much. As busy parents of four, we both understand that without a budget, our finances could easily derail.
Why Is a Family Budget Important?
Financial frustration often stems from a gap between what we say our priorities are and where our money actually goes.
A family budget helps bridge that gap by ensuring your spending aligns with your values and goals.
For example, if your priority is to bless others but you’re barely covering bills each month, that can be frustrating. A budget brings clarity and purpose to your finances, allowing you to live according to your values.
Of course, financial difficulties don’t always mean irresponsibility. The Bible tells us that the Lord tests us and allows trials to refine our faith (Matthew 6:19-20). Sometimes hardships come as part of our journey. But often, financial struggles result from poor planning. Either way, having a solid budget and being diligent in following it is a wise approach (Proverbs 21:5).
Monthly Budget Template
A good budget starts with a plan. Use my free monthly budget template to start organizing your finances and follow along as you work through the steps in this guide.
Instructions on How to Use the Monthly Budget Template
Creating a budget doesn’t have to be complicated, and while it’s essential to get it right, no one wants to spend hours trying to figure out how to set one up. That’s why we’ve designed these easy-to-follow instructions for using the Monthly Budget Template—to save you time and help you take control of your finances quickly and effectively.
Step 1: Input Your Income
Start by entering all your take-home income for the month. This includes your salary, side hustles, or any other sources of regular income. Be sure to list only your net income (the money you actually take home after taxes and deductions), as this will give you an accurate picture of what you can spend.
Step 2: List Your Fixed Expenses
Next, input all your fixed monthly expenses—these are the non-negotiables. Think rent or mortgage, utilities, car payments, and insurance premiums. These amounts tend to stay consistent month-to-month, so they’re easy to plan for.
Step 3: Track Your Variable Expenses
Variable expenses can change each month, and this is where many people struggle with overspending. Include things like groceries, dining out, entertainment, and gas. By tracking these expenses, you can spot areas where you might be overspending and make adjustments.
Step 4: Plan for Savings and Investments
Now, allocate a portion of your income to savings and investments. Whether it’s building an emergency fund, contributing to retirement, or setting aside money for a big purchase, savings should be a top priority in your budget.
Step 5: Review and Adjust
Once you’ve inputted all your income and expenses, review your budget. Are you spending more than you’re making? If so, consider cutting back on non-essential expenses or looking for ways to increase your income. The key is to make your budget work for you, not the other way around.
By following these steps, you’ll be on your way to financial stability in no time.
Why Have a Monthly Budget?
You may be thinking, “Do I really need a budget? And why monthly?” The answer is yes—especially if you want to take control of your finances and stop living paycheck to paycheck.
You’re probably reading this because you were looking for ways to save money or manage your finances better. Whether you’re just starting your career, saving for the future, or trying to avoid financial stress like your parents did, a strong monthly budget is a vital first step.
A lot of people think they don’t need a budget, believing they can live within their means without formally tracking their money. But often, this leads to years of financial stagnation, where saving more than a few dollars a month feels impossible.
If that sounds familiar, don’t worry—you’re in the right place. Our budget template can help you start saving, investing, and reaching your financial goals.
Why You Should Budget on a Monthly Basis
So, why do we recommend budgeting monthly rather than yearly or weekly? There are several important reasons:
- Easier to Manage: Setting a budget for the entire year in January sounds great, but six months later, you might not even remember how you calculated certain numbers. A monthly budget is more manageable and easier to adjust as circumstances change.
- Accounts for Variable Income/Expenses: Your income or expenses are likely to change month-to-month. Some months might have more pay periods, or your bills may fluctuate. Monthly budgeting helps you adapt to these changes and maintain accuracy.
- Balanced Time Commitment: A monthly budget strikes the perfect balance between too frequent and too infrequent. Budgeting daily or weekly might feel overwhelming and time-consuming, while a yearly budget lacks the flexibility to reflect your current financial situation. Monthly budgeting is effective without taking over your life.
In the end, a budget should simplify your financial life, not complicate it. By budgeting monthly, you give yourself the structure you need without feeling bogged down by constant financial planning. That’s why we swear by it, and we think you will too.
How to Create a Successful Family Budget
- Determine Your Monthly Income
Start by listing your household’s total take-home pay. If your income is irregular, estimate conservatively by using the lowest amount you’ve earned over the past 6-12 months. - List Your Monthly Expenses
Next, log in to your bank accounts and gather accurate data on what you’re spending each month. Be sure to look at both fixed expenses (like rent, insurance, and utilities) and variable ones (like groceries and gas). - Plan for Non-Monthly Expenses with Sinking Funds
Budgeting can get derailed by “unexpected” expenses—like car repairs or birthdays. But in reality, these costs aren’t unexpected! You know they’ll come eventually, so set aside money each month into sinking funds for things like car repairs, home maintenance, and annual expenses. This way, you’ll be prepared without having to tap into your emergency fund. - Create Budget Categories
After listing all your expenses, break them into categories. Some people prefer detailed categories, while others like to keep things simple. Do what works for you! Consider fixed expenses, variable expenses, and sinking funds. - Prioritize Your Financial Goals
Don’t wait until the end of the month to see what’s leftover for savings. Make your financial goals—like building an emergency fund, paying off debt, or saving for a vacation—a priority. Add these goals to your budget before non-essential spending. - Create a Zero-Based Budget
In a zero-based budget, your income minus expenses should equal zero. If your expenses exceed your income, adjust accordingly by cutting back or finding ways to increase your income.
[Download Free Budget Template]
Tips for Budgeting Success
- Track Your Spending
Use a budgeting tool or spreadsheet to track your expenses throughout the month. This will help you stay on course and make adjustments as needed. - Use Cash Envelopes
If you struggle with overspending, try using cash envelopes for categories like groceries, entertainment, or clothing. Studies show that people spend less when using cash because it feels more tangible than swiping a card. - Family Involvement
Consider holding regular family meetings to discuss financial goals and the budget. Involving children in these conversations can help teach them the importance of financial responsibility. - Be Flexible
Budgets aren’t meant to be rigid. As life changes, adjust your budget to reflect new priorities or challenges. Just make sure you stay active and engaged in the budgeting process.
[Download Free Budget Template]
Budgeting Methods to Consider
- 50/30/20 Budget:
A simple formula where 50% of income goes to needs, 30% to wants, and 20% to savings. While easy to follow, it may not fit everyone’s circumstances. - Envelope Budget:
This method uses cash envelopes for specific categories. It’s a great way to control impulsive spending but can be less convenient. - Irregular Income Budget:
For those with fluctuating income, base your budget on the lowest expected income. Cover necessities first, then financial goals, adjusting as your income changes.
Build an Emergency Fund
Your emergency fund is your first line of defense against financial crises. I recommend setting aside 6-12 months of expenses into a high-yield savings account. This way, when unexpected expenses arise, they’re an inconvenience, not a disaster.
Pay Off Debt Quickly
Debt can consume a large portion of your income, limiting your financial flexibility. Make paying off debt a priority, and consider using the debt snowball method, where you pay off smaller debts first, gaining momentum as you go.
[Download Free Budget Template]
Conclusion
A family budget is a powerful tool that brings peace, stability, and freedom from financial stress. Whether you’re just starting or looking to fine-tune your existing plan, this guide offers practical steps to help you build a successful budget that works for your family.
