Family budgets: practical tips for better financial planning
Whether you simply want to keep an eye on your expenses or carry out a project close to your heart, creating a family budget is one of the most effective ways of taking control of your financial situation and keeping your household in balance.
But it’s not enough just to create a budget: you have to keep it up to date! Unexpected expenses, fluctuating incomes, needs that change as quickly as children do... Family realities change, and your budget needs to keep up. Fortunately, Kaleido has a simple guide to help you manage your family’s finances, one small step at a time.
What is a family budget?
A family budget is a simple tool that provides a clear overview of a family’s income, expenses and priorities. Usually prepared on a monthly basis, it helps to set money aside for a specific project, or simply to ensure greater financial peace of mind.
Unlike a personal budget, it also takes into account the children’s future, for example, by providing for regular contributions to a Registered Education Savings Plan (RESP).
Key elements of a family budget
Expenses
- Fixed expenses, which recur every month: housing, electricity, telephone, Internet, cable TV and other subscriptions, insurance, debt repayment, etc.
- Running expenses: groceries, clothing, transport, leisure activities, health costs, etc.
- Exceptional expenses, which are often unforeseen and can easily unbalance a budget: repairs, family events, etc.
Income
- Net salaries of all household members.
- Assistance and benefits: allowances, alimony, rental or investment income, government credits, annuities, tax refunds, etc.
Savings and projects
- Investments: RESPs, TFSAs, RRSPs, etc.
- An emergency fund to cover unforeseen events.
- Projects: travel, renovations, major purchases, etc.
5 easy steps to effective family budgeting
Step 1: Choose a family budget template
Homework is done? Dishes are put away? Take a moment to take stock of your finances. A clear, easy-to-use budget template adapted to the realities of Quebec families will help you get started on the right foot. Our family budgeting tool will have you up and running in just a few minutes.
Other planning aids are also available, including the Budget Planner offered by the Government of Canada.
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Step 2: Add up household income and prepare a list of expenses
Add up your monthly household income to get a clear picture of how much money you really have. Then write down all the expenses you have to pay each month, from essential bills to everyday expenses. Take the time to be complete and honest in this exercise, and don't forget the little realities that happen in families (like winter boots that suddenly don’t fit or extracurricular activities that get added to the calendar!).
Step 3: Define your financial goals
Qu’il s’agisse d’un voyage en famille, de rénovations rêvées depuis longtemps ou du remboursement d’une dette, clarifiez le montant à épargner et le délai pour y arriver.
Step 4: Adjust and balance your monthly budget
Compare your monthly income with your total expenses to see how much you really have left over each month to reach your savings goals.
Monthly income – monthly expenses × number of months = possible savings target
Step 5: Monitor and revise your budget as your situation changes
Once you’ve established your monthly budget, get into the habit of consulting it regularly to adjust it as your daily life evolves. Diapers aren’t needed anymore? This sum could then be reallocated to new needs... or put aside for the future.
Example of a balanced monthly family budget
To illustrate the breakdown of expenses, here’s a simplified example for a family of two adults and two children with a monthly net income of about $6,000. These amounts are given as an indication and may vary according to your consumption habits and place of residence.
Possible monthly breakdown for a family of four
| Fixed expenses | Amount |
|---|---|
| Housing – 30% | $1,800 |
| Electricity – 3% | $180 |
| Other expenses (Internet, cell phones, home insurance, various subscriptions) – 5% | $300 |
| Transportation (car, gas, maintenance and insurance) – 20% | $1,200 |
| Daycare (subsidized, for 1 child) and other daycare costs – 4% | $240 |
| Variable expenses | |
| Food – 20% | $1,200 |
| Leisure and outings – 5% | $300 |
| Clothing – 3% | $180 |
| Personal and health care – 3% | $180 |
| Miscellaneous and unforeseen – 2% | $120 |
| Savings and investments | |
| Savings accounts* and emergency funds – 5% | $300 |
| Total | $6,000 |
*See our article RESP, RRSP or TFSA: which account should you choose for your family? for savings strategy guidance.
Keeping to your family budget: our top tips
Keeping to a daily budget doesn’t have to be complicated. A few simple habits can make all the difference:
- Create a realistic budget that fits your family’s reality.
- Leave a margin for unforeseen events, so a surprise expense doesn’t unbalance your budget.
- Keep an eye on small, recurring expenses. These accumulate faster than you think.
- Focus on regular savings. It’s better to save small amounts over the long term than large sums on a one-off basis.
- Take advantage of unexpected cash inflows, such as a tax refund or an inheritance, to advance your projects or strengthen your savings.
- Automate your savings, so you can save without thinking about it, even when you’re busy.
Tips and tricks for saving money as a family
If the budget is tight at the end of the month, it may be a sign that expenses are outstripping income. Good news! A few adjustments can quickly make a difference. Here’s how to reduce family expenses:
- Make a complete list of your expenses to identify those that can be reduced or eliminated.
- Cook at home more often.
- Choose sustainable, quality purchases.
- Keep an eye out for discounts.
Want to save more? Consult our tips and tricks for better savings.
How to get children involved in financial management?
Understanding the value of money comes early! Involving children gradually helps them to develop sound financial habits. Giving them a small allowance, setting savings targets or comparing grocery prices with them are concrete gestures that make financial concepts easier to understand.
Common mistakes to avoid
Certain mistakes can quickly knock a family budget out of balance. Among the most common: forgetting to include occasional expenses, not reviewing your budget regularly, neglecting savings or not getting the whole family involved in planning.
It’s also hard to stick to a budget that’s overly optimistic, based on uncertain income or underestimated expenses. The key? Rely on realistic figures... and regularity. Because when it comes to family finances, as in a child’s early years, it’s the small, steady steps that lead to the biggest breakthroughs.
A family budget to secure your children’s future
Effective family budgeting isn’t just about managing the day-to-day. It also helps to gently prepare your children’s future. By starting early, even small sums can grow with them thanks to compound interest.
Next step: concrete plans for financing post-secondary education.
The Registered Education Savings Plan (RESP): an essential tool
An RESP is a long-term savings account designed to finance a child’s post-secondary education. It remains one of the most effective ways of preparing for your family’s financial future, thanks to the following advantages:
- Tax-sheltered growth: the income generated is not taxed as long as it remains in the plan.
- Government grants: these grants will increase your contributions by 30% to 60%,1 depending on your eligibility.
- What if your child decides not to pursue post-secondary education? You can recover your capital without penalty and receive your interest in the form of accumulated income payments (AIP). Only the grants will have to be returned to the governments.
Discover other savings strategies that can help you boost your RESP.
How much could your RESP earn?
Our calculator will give you an estimate of how much your education savings could earn, based on your contribution preferences.
FAQ: creating, managing and monitoring a family budget
Add up your household income, list all fixed and variable expenses, then set realistic savings targets. A clear budget template will then allow you to track the amounts each month and adjust according to your family reality.
A number of free and paid apps and tools, such as YNAB, Budget Online and Wallet, make it easy to keep track of income and expenses by automating budget calculations and visualization. To get started quickly, use our family budget tool or pur monthly budget tool.
Reducing expenses starts with creating a strict budget, regularly monitoring spending and eliminating non-essential expenses. Cooking at home, keeping an eye out for discounts, limiting outings and opting for sustainable purchases are just some of the things you can do to lighten the family budget.
Review your family budget every month to adjust it to actual expenses, and take stock every year to review your objectives. You also need to make adjustments for major life changes, such as a new job or the arrival of a new baby.
1. Canada Education Savings Grant (CESG) from 20% to 40% and Quebec Education Savings Incentive (QESI) from 10% to 20%, according to adjusted family net income. Certain conditions apply. See our prospectus at Kaleido.ca.
