Dadhood is an expensive period of your life and only gets more so as you increase the size of your family. While becoming a dad is one of the most exciting, rewarding and fulfilling things you can do, it’s definitely worth creating a budget to follow so you can maintain a healthy bank balance and enjoy all the more family time.
Here are our tips on budgeting for a family.
Prepare Yourself for Budgeting
Over a month, collect your bank and credit card statements, as well as any other paperwork that might show your ingoing and outgoing expenses. If you use internet banking, it may be possible to get these printed out. Or, you could go to your bank and request them. When you have this information, then you can create a budget.
This starts with tracking your spending, including regular bills like utilities, rent and also the non-essentials like the occasional trip to the ice cream parlor or movies. Fixed and variable spends are the two means through which your salary gets depleted.
By analyzing where you’re spending your money, you can easily create budgets for each specific cost bracket. These could be housing, transportation, food, childcare, other necessities and taxes.
Now, you don’t need a specific goal or savings objective to start budgeting right away, but it’s wise financial practice to cut costs where you can. Who knows what you might have to pay for in the future? It can be anything from boiler repair to another new pair of shoes for your child (who knew they grew so fast?). Or there may be other important and costly goals in your future, such as growing your family through surrogacy or adoption.
Determining the Essentials
Identifying your essential spending is simple. All you have to do is find out what’s non-essential. That early morning muffin? Non-essential. Friday night takeout with the kids? Delicious, yes, but still non-essential. Spa day? We're really sorry, but regardless of how nice those complimentary mimosas are, it’s still a non-essential.
What are the things your family literally can’t do without? For those dads who have a baby in the house, this means things like diapers, formula and other items that keep your bundle of joy well cared for.
For older kids, it might mean school books, after-school activities, lunch money - the list goes on. Anything you can do without can be adjusted. This doesn’t mean get rid of your takeout or the occasional coffee entirely as we all need to indulge ourselves once in a while.
It means being a little wiser with the money we have. Just because we have it, it doesn’t mean we should spend it. Parenthood is an expensive time and for gay, bi or trans dads, it can be even more expensive. Adoption, surrogacy or IVF are costly processes, so whatever you can do to make sure you’ve got more money at hand is always a wise choice.
There are many ways of making your budget go the extra mile and a lot of it comes down to preparation and sticking to your plan as a family. For example, consider the 50/30/20 budget, where you spend 50% of your income after tax on needs, 30% on wants and the last 20% goes into your savings. It’s a good way of getting on top of any debt and saving more successfully for the long-term.
The 50/30/20 budget is a really simple budget to follow if you can figure out your income after tax. But remember, the 50% and 20% are the most important parts. You need to have enough money for your essentials every month.
If your essential expenses go over this 50% mark (imagine your car needs repairs), it’s worth dipping into the 30%. But don’t worry, this isn’t the end of the world and won’t be for long. It just means you need to adjust your spending for that particular time.
Now, the 20% could go on savings or it could go directly towards debt repayment if you have any - or a mix of both. A good budget thinks of the bigger financial picture, not just for the ‘now’, but for the future too. Your budget needs to put you in a good position financially in five years’ time and five years after that.
After essentials and saving/debt repayment, you may have a little money left over to play with. Rather than spending it on small things (like that morning muffin), why not spend it on making memories? This doesn’t have to be lavish vacations abroad (although they’re always fun!), but it can be smaller days out such as trips to local museums or the zoo.
For more quick tips for dads looking to budget and save some money, read our blog on 30+ Money-Saving Tips for Families & Households. You’ll find fast, easily-actionable tips for any family.
To see a more visual representation of a budget, you can utilize the Economic Policy Institute’s Family Budget Calculator to help you see what kind of budget you should be living in, depending on your family size and area. It ‘measures the income a family needs in order to attain a modest yet adequate standard of living’, using averages of economic security in the US.
Have you got any money-saving tips others could benefit from? We’d love to hear about what you do to knock off the dollars from a weekly grocery haul or any great bulk recipes for saving money on meals! Just get in touch with us and share your best budgeting secrets.