Example Budgeting for a Family of Three

Look at short- and long-term needs when planning a family budget.
i Hemera Technologies/AbleStock.com/Getty Images

You probably learned the hard way that two can’t live as cheaply as one, so don’t let three be a crowd as you plan your budget to account for your first child. Children’s financial needs are different and often more serious than an adult’s, due to the emphasis on health care and education. A budget for three should focus on controlling discretionary spending without eliminating the occasional night out or impulse buy.

The Document

Whether you use a simple spreadsheet or basic money management software, your document will focus on your income and expenses. If you have excess income, your savings section will help you work toward retirement, college fund, home down payment and vacation goals. Divide your expenses into necessary and discretionary categories to let you easily find expenses you can cut when cash is tight. Include all potential income during the year, including your pay, gifts from mom and dad and any extra cash you might generate from, for example, a summer yard sale. Include a total row that shows your income or deficit each month. At the end of your rows, include columns for each income and expense item, monthly averages and year-end projections.

Household Budget Items

Most household budgets include basic living expenses such as rent or mortgage, utilities, groceries, television/Internet, dining, entertainment and repairs. Include expenses such as car payments, student loans, credit card debt and insurance. Place the amount of fixed expenses, such as rent and car payments, into your budget for all 12 months. Use last year’s bills to estimate your monthly variable expenses, such as groceries and utilities, and enter them into each month’s field in your document.

Personal Items

Some family budget items are unique to each person, and tracking costs this way will help you see who can cut back if necessary. Break out expenses by adult for items such as clothing, hair and nails, golf, tennis or other regular sports activity, gym membership and hobbies. Your child’s expenses will include toys, clothing, day care or school tuition and health care and items for transporting an infant or toddler. Breaking out personal expenses will help you determine if someone needs to cut back, or if adults need to start sharing items to help meet your budgeting goals.


Determine your savings needs and subtract them from your income each month to help you better focus your budget. If you want, include savings in the expense portion of your budget to determine if you can meet your goals with your current income. Include an emergency fund, retirement contributions, credit card and student loan debt reduction, home down payment, college fund and vacation in your savings plans. Another way to set your budget for savings is to place these items outside your income and expense categories and assign a percentage of your net income each month toward these goals. This way, you will only put money toward savings when you have enough money to meet your other bills each month.


Look at the effect of putting money into a health savings or flexible spending account if your work offers this. You can pay for health care while reducing your payroll tax, putting more of your pay into your pocket, if you have an idea of how much you’ll spend on health care during the year. Putting off contributing to a 401(k) can cost you thousands in the long term, but can help you reduce credit card debt and interest in the short term, improving your cash flow and credit score.

the nest