Adapt your budget to the changes in your family

How to adapt your budget to the changes in your family

Your budget may change quite a bit when it goes from being a personal budget to a household budget that must include the needs of a whole family. Read on to know how you can make it work as time goes by.

Taking care of your family means addressing a number of financial challenges and keeping track of the constantly changing expenses that your family has is probably the biggest one. 

Your budget will need to change and adapt as you plan for additional monthly costs like baby food or diapers when you decide to start a family, or as your children get older and start with expenses like classes and sports that you will need to budget for. A family budget is the best way to tackle these constant changes.

What is a family budget?

A family budget is a statement that shows how family income is spent on various items of expenditure: necessaries, comforts, luxuries, and other cultural wants. It generally has more categories than a personal budget (and often multiple incomes), but its purpose is the same: to help your family successfully manage its money.

Creating a budget will help your entire family succeed financially, no matter how many members your family has. Everybody who depends on your income (including your parents if they depend on you or children from a previous marriage or away at college).

 A family budget is a key strategy to ensure that your household is financially healthy (now and in the future) because:

• It establishes how much your family can spend each month to help prevent debt. 

• It helps you to save for future major expenses.

• It provides an overall view of how much debt your family has and how that debt impacts your collective financial future.

• It helps you to be prepared for an emergency.

In other words, a family budget is a key strategy to ensure that your household is financially healthy — now and in the future.

Your budget may change quite a bit when it goes from being a personal budget to a household budget that must include the needs of a whole family. Read on to know how you can make it work as time goes by.

What elements should you include in your family budget?

Family budgets typically have seven components: housing, food, child care, transportation, health care, other necessities (e.g., clothing and entertainment), and taxes. 

These components can be organized into four categories:

• Fixed expenses: These expenses include items that cost the same every month (mortgage/rent, car payment) and that can’t be reduced because they are necessities. The amounts remain stable, so you know exactly how much of your and your partner’s paychecks you need to put toward these expenses.

 Variable expenses: Variable expenses (e.g., groceries, utilities) fluctuate month to month. Some of these expenses will be needs (your electricity bill), others are wants (money spent on outings).

• Debt: Debt can be anything from credit card balances to student loans. An effective budget will help you figure out how to pay off any shared debt (and avoid any debt that your kids might be saddled with later on).

• Goals: Your family’s financial goals should be can be short-term and long-term goals and are what your budgeting decisions are decided upon.  They could be things like “Save $200 for emergencies over a year” or “Pay off the car loan in three years.” 

All of these categories are important to keep in mind as you prepare to build your budget. Getting your budget right is the first step towards financial success.

Having a baby without going bankrupt

Most of us feel it is impossible to have a baby and not go broke. Follow these tips and find out how to raise a happy child without giving up your financial dreams.

We are constantly bombarded by pictures of beautiful nurseries with expensive toys and designer rocking chairs. But your baby doesn’t need these things to be a happy, healthy child. Here is some simple advice to help you have a baby without going bankrupt.

Work with what you have

You may be tempted to add a room to your house or spend fortunes on furniture or decorations, but these things are not fundamental to be able to raise your child. You should start by making do with space and things you already have at home. Once the financial turmoil created by the new baby has calmed down, you can spend money on the things that can wait.

Make the most of your baby shower

Baby showers are a very simple way of receiving vital necessities. You can make the most of this event if you ask for what you need. People will be happy to buy something you really want instead of spending money on something you may never use. Friends and family can get together and share the expenses of bigger ítems like strollers, cribs, or baby monitors.

Accept hand-me-downs

If you are not the first of your friends or family to have a baby, many people may be able to give you hand-me-downs. Babies only use clothes, toys, eating chairs, or baby car seats for a very short while, so most times, ítems are almost new. 

Don’t be ashamed to accept these things if someone offers to give you theirs, you’ll be saving an enormous amount of money.

Stock up on things before the baby arrives

You have no idea how many diapers a baby uses until you have one. Stocking up on diapers, baby towels, baby soap, or any other you have space for, will bring down the cost of those first months when you’ll surely be spending money on things you couldn’t anticípate.

Making your budget work to afford a second child

If you're expecting a second child, your spending and savings habits will necessarily have to be modified. Here are some budgeting tips to help you adjust to the new baby.

Having kids is anything but cheap. If you’ve had your first child, you already know this. From diapers to daycare to future extracurricular activities it all adds up. 

While you may feel like you need no advice, overlooking tips to prepare financially for a second child could be bad news for your bank account. Fortunately, affording a second child is more than possible with the right planning.

If your new baby is on the way, consider these budgeting tips for a second child:

1. Think twice about upsizing

When asking yourself if you can afford to have a second child, consider whether your current home and car can fit your growing family.

Running the numbers through a mortgage affordability calculator can give you an idea of how much a bigger home might cost if you need one.

Swapping your current car out for something larger may also be on your mind, but upgrading could mean adding an expensive car payment into your budget.

Buying used can help stretch your budget when you’re trying to afford a second child.

2. Be frugal 

It’s tempting to go out and buy all-new items for a second baby, but preparing financially for a second child should include reusing as much as you can from your first child. That might include clothes, furniture, blankets, and toys.

Accepting hand-me-downs and buying used items will help your budget greatly.

3. Analyze your childcare options

You may already realize how expensive daycare can be for just one child, but that doesn’t mean affording a second child will be impossible. If one parent’s income is going solely toward childcare, for example, it could make more sense for that parent to stay at home.

Parents should think about the trade-off between both parents working if it means paying more for daycare. 

4.    Prioritize financial goals in your new budget

Most tips to prepare financially for a second child focus on spending, but don’t neglect to create line items for saving in your budget.

An emergency fund, paying off debt, and saving for retirement should also be on your radar. You might even be thinking about starting to save for your children’s college.

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