Limiting your family’s spending is one of the most powerful ways to bring order to chaos. Think of it as your financial roadmap – a clear picture of how your money will flow. Whether you’re trying to save for your dream vacation or pay off debt, a solid, conscious spending plan can guide every household financial decision.
I’m not saying to create a hard budget for your family. Most people struggle to manage their individual finances, let alone their family’s, and the reason we have this struggle is because budgets seem restrictive and don’t usually provide much room to work. There is also a negative association with budgets because they place an artificial limit on how much you should spend, making people less likely to follow these budgets.
A conscious spending plan for your family will allow you to proactively manage your family finances while also creating room to spend without feeling guilty. To get started, list all of your sources of income, from salary to side hustles. Next, categorize your fixed costs – everything from household expenses to groceries and transportation. This should be around 50-60% of your total family wage.
Next, make sure you set aside money for savings and debt repayment. This can represent about 10-20% of your total family income. Savings is anything your family saves for, like new furniture for the house or perhaps for your next family vacation.
Another 10-20% should be allocated to long-term investments. This is typically the retirement savings of the working adults in the family. If there is money left over, you can also set aside a small amount for younger children to give them a head start, or for seniors living in your household who may already be retired.
Finally, you should set aside 10-20% of your income for guilt-free spending. This could be for your family’s entertainment, such as going out to watch movies or enjoying a delicious meal. Every household is different, so spend that money guilt-free on something that will make all of you in your home happy.
Notice that I’ve given you ranges to work with, which is the beauty of a conscious spending plan. You are not limited to a restricted percentage each month, and you are welcome to adjust these ranges depending on the size and current spending of your family. For easy tracking, use a tool like YNAB, or if you’re looking for a ready-made solution, try Conscious spending plan Template, which you can easily modify to suit your family’s needs.
What was really surprising was my conversation with Lucas and Train And how they justify overspending on food, simply because it is seen as a “basic necessity.” This is the mindset that many families fall into, believing that some groups are untouchable when it comes to cutting expenses.
However, the truth is that even “necessities” can and should be improved within a family’s conscious spending plan if they are needed. Food may be essential, but without setting realistic goals, it’s easy for costs to spiral out of control. Creating a conscious spending plan for your family will force you to take a hard look at where your money is actually going.