Family Budget For The New Year

The New Year is a great time to revise the family budget and set new goals for the family finances. We have been running a family budget since we went to one income about seven years ago.

Over these years we have developed a comprehensive excel spreadsheet for the family budget. I do have to credit Mr Infrastructure as the “brains” behind the spreadsheet and the simple process that we follow.

To help with this post, Mr I modified our family budget spreadsheet to demonstration amounts and altered some of the categories of expenditure in the spreadsheet to be more generic and easily understood.

Click here to see the Planning With Kids Family Budget Spreadsheet.

We follow a 3 step process to set and then track the family budget. Each step has its own corresponding spreadsheet:

STEP 1- REGULAR PAYMENTS SPREADSHEET
The aim with this spreadsheet is to input all known payments that you will have through out the year. The previous year’s bills can be used to approximate what you might spend for bills that are of a variable nature.

By calculating the total regular payments you have through out the year, you can then use this figure to help determine what your discretionary expenditure can be.

STEP 2- ANNUAL SAVINGS SPREADSHEET
This is a basic income minus expenditure spreadsheet. You enter all the sources of income and their frequency that you are likely to receive throughout the year, to arrive at a total income figure.

For expenses, the regular payments total from the first spreadsheet is automatically linked as the first expenditure item. For the next three expenditure items you need to estimate how much you will spend on each category – Miscellaneous items, Groceries and Clothes. The spreadsheet currently works on a weekly figure, but this can be easily changed if you prefer to work on fortnightly or monthly amounts.

Once you have entered these estimates, the spreadsheet then calculates what your net annual savings (or deficit) will be with that level of expenditure. It is at this point when you have put your first estimates in that you may have to make revisions to achieve your financial goals for the year.

For some families the goal may be to balance the budget and therefore you will be happy if this amount is $0. For other families if you are saving for a deposit for a house or for a new car, you may need this figure to be $10,000 surplus to meet your savings goal.

STEP 3- INPUT OF SPEND SPREADSHEET
This is where you track on a daily basis the amount you spend on the discretionary categories (Miscellaneous items, Groceries and Clothes) in reality. As Mr I writes in his notes on the spreadsheet:

“Be disciplined…input every expenditure when it happens (including those sneaky little credit card purchases or $3 coffees).”

It is amazing how quickly all those little expenditures add up! The great thing that I have found about using the spreadsheet regularly to track our family budget, is that it does make me think twice on those impulsive purchases. Sometimes I do just go ahead and splurge at a sale, but usually only if I know that there is room in the budget to do so.

As the budgeted figures are weekly you need to be mindful that it is not always appropriate to run a zero balance. For example, although the allocation for clothing in the demonstration spreadsheet is $100 a week, this is not how in reality expenditure on clothes works. A new suit for Mr I to wear to work would be multiple times this amount, but bought only a couple of times a year. To do this without putting the budget into deficit, we need to build up a surplus in the months before hand.

Putting The Family Budget On Google Docs

Until recently, Mr I would tell me his expenditure and I would update the family budget spreadsheet daily when I was online. However, this wasn’t as effective as I would have liked. A couple of months ago I uploaded the family budget to Google Docs, shared access with Mr I and now we both have access to the family budget online. We can both update the spreadsheet ourselves from anywhere we have internet access.

I have written a tutorial on how to load documents on to Google Docs on my Set Up Email Address blog – Google Docs: Managing Your Family Budget. This will show you step by step, with screen shots how simple it is to have greater access to your family budget online.

I have uploaded the family budget spreadsheet to Google Docs and set access to “Share With The World”:

2009 Family Budget Spreadsheet

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Comments

  1. says

    Happy New Year! Thanks for sharing your ideas on how you manage your family budget. I think you’ve hit the nail on the head – recording down all the expenses even as little as $3 coffees. Its a great way of highlighting where we have to cut back on i.e. cafe trips in our case!!

    ickle Kidss last blog post..New ickle Website!!

  2. says

    We do this kind of budgeting too, albeit on a slightly more macro level than tracking each coffee.

    Our spreadsheet tracks regular weekly, monthly & annual outgoings (mortgage, insurance, car loan, car maintenance, school, kinder & activity fees, rates, utilities) and sets an amount for recurrents (groceries, petrol, clothing, entertainment, a small weekly personal discretionary fund of $30 apiece – which I tend to spend on books and chocolate, and G on coffee and lunch with colleagues once a week).

    What helps us a lot is that G, my partner, has another spreadsheet that tracks the progress on our mortgage (payments made, interest charged, and how far ahead we are of the bank’s “scheduled” total). The second motivates a keen adherence to the first, because money we preserve by keeping to our budget goes straight off the mortgage in almost all cases and we can SEE the benefit of that very clearly (5 years in to the mortgage, we are about $40,000 ahead of where the minimum repayments would put us, so we consider that a success). This year, instead of overpaying the mortgage, we are saving our income surplus (should be in the region of $12k) to replace the flooring in the dining room and the tatty old curtains with blinds. The fact that we can do this in a year when I’m on half-pay maternity leave from my part-time work (so only getting paid for the equivalent of 8 hrs a week!), is only possible because we budget, and I am thus a big fan of it.

    Kathys last blog post..No Menu Plan this week

  3. PlanningQueen says

    Ickle Kids – Happy New Year to you as well!
    Kathy – Your mortgage spreadsheet sounds very motivating!

  4. says

    Interesting post, and a great spreadsheet!

    We track our expenses using a family budget planner.
    Getting in control of your finances is a great start to the new year! And SO empowering!

  5. Antonia Quinton says

    Wow I’m impressed guys and I’ve already downloaded the planner and budget guide. I love the idea of it being available from google docs as well. One of the things that my fiance and I have struggled with is how to organise ourselves in terms of what we’re doing. Having sort of just got the hang of it, it’s good to know about the budget option as I can start to implement that and hopefully in the future if and when we go to one income he can help too.

  6. Antonia Quinton says

    Oooh that’s funny – I’m in England and the time is 2:39am on 11th! I couldn’t sleep. Just noticed your time bar and realised the time difference! :)

  7. says

    What a great article, and so refreshing to see someone else who has established the need for businesslike structured discipline in working the families income and finances into a budget. I recently commented on another post in which there was some mixed feeling and “argument” that a family is based on emotions and not strict business procedures, but I maintain that a system and a plan has to be set up and a “CFO” appointed who is going to control the whole thing. Your clearly set out spreadsheets are indicative of the kind of structure and discipline required to bring about family financial management success.
    Thanks again for a great article.
    Barabara

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