How to write a family budget and save more money

Last Modified 16th of February 2021

There are various ways you can save money on a day to day basis, plenty of tips to follow and lots mistakes to avoid and if you do all of those things consistently you will probably save money and generally succeed at living a pretty frugal and financially secure life.

But trying to save money in this hit and miss way will generally result in poor adherence to your goals, occasional splurges and a feeling that you are never really allowed to treat yourself. It can work, but there is a better way: Write a budget.

Step 1: Write down your outgoings

Start by logging on to your Internet banking and going through your Direct Debits and standing orders – do this for all of the relevant accounts. Write all of your costs in a spreadsheet; typically this should include: rent, utilities, TV, phone, insurance and so on.

All of the less consistent costs can be kept in a different section. Start by jotting down costs to do with every day spending – just write a description, don’t worry about the monthly amount yet. Your list will probably include:

  • Food shopping
  • Petrol
  • Car maintenance
  • Meals out
  • Night out
  • Clothes shopping
  • Entertainment

It is easiest if you go through your bank statement from the last 3 months for inspiration. Any items that don’t fall into a category can become a new category. You can have a miscellaneous category, but try to keep it small.

Now go through those statements again and assign every item to a category, then total up each category and divide by 3 to give you your average monthly spend over those 3 months.

Step 2: Write down your income

Chances are this one is much simpler. Whatever your combined family income is after tax, write it down. If it varies then take an average. Although if your income is dependent on performance it is best to take off some of the amount so as to be sure.

If you total up all of your costs you will now be able to see at a glance how much money you have left at the end of each month. If this figure is negative or close to zero then you need to address your spending quickly.

Step 3: Saving more money

Now that you can see exactly what you are spending you can compare to what you think you should be spending and figure out where you think you can make the biggest savings. If you think a category is about right then leave it be. The key is trying to find the most painless ways of saving money.

If you have debts being paid off then it is well worth doing whatever you can to get them paid off as this will free up the cashflow and save you on interest too. Try being really strict for a month or two, sell mobile phones that you don’t use any more and any other gadgets to put into your debt fund.

Next you can focus on other spending – often the biggest place you can make an impact is on food shopping and going out, so it is up to you to decide what your limits should be. You should allow yourself some treats, unless your overall cashflow is negative of course, but set a budget.

By budgeting you will be more careful about when you treat yourself and you will also be rewarded for looking for bargains, as they will free up your budget for other things.

Step 4: Track your progress

The ideal would be to track your spending in every category, but in reality you are unlikely to stick to that. Fortunately, most categories will look after themselves, so ignore the categories that are fairly consistent anyway and just focus on the ones where you are making changes.

If you are trying to keep your shopping bill down, start noting down the cost of every shopping trip. Whilst at the shop make a conscious effort not to buy expensive items and also buy things that are good value for money and last a long time.

The easiest way to keep your budget is to carry a small notepad in your pocket and every time you spend money, note it down and keep a total. You can split the notepad into sections for shopping, meals out and whatever else you are trying to cut down on.