How to Create a Family Budget

You want to create a budget, but you don’t know where to start.  Maybe you took a stab at it before but feel like you’re not doing it right. Or you may actually have an operating idea of how to handle your finances, except that it’s not written down and think that there’s no point to put it on paper. Or do you have one but are loose in your execution of it, so the family isn’t even aware why there are limits to your spending, and they inadvertently break your plan?


I was in the grocery store the other day and brought along my 4-year-old daughter. I prefaced to her that I need her full cooperation while mommy is in the store. I don’t want any tantrums; I just want company while combing through each aisle. I need her to be a good helper and spot all the items on my list.


We were making good time. I’ve checked off ¾ of my list and managed to dodge my toddler’s pointy finger for new, shiny (or colorful) objects. I must’ve referred to the terms “list” and “budget” a good number of times that my daughter picked up the whole premise of it. She asked me if Oreo cookies were on this list. I said ‘no,’ and then she said calmly ‘maybe next time.’ I was astounded at the maturity she displayed here and recognized it was fertile ground for a life lesson…


I explained that the next time I was making our grocery list, she could ask me to put items she needs, only after giving it some thought because it’s not good to be compulsive about it. I’ve also emphasized the importance of following a plan so that we aren’t wasteful of our resources. (Yes, this is still the 4-year-old… and I believe she got it.)


Have there been times when you listened to self-talk convincing you that nothing will work even if you try? That budgeting is constricting, and you don’t need to have guardrails in how you handle money because you’re an adult. Honestly, it gets even more complicated now that we are adults because our wants braid into our needs and we have difficulty telling them apart.


One way we can display maturity in this area is when we create a budget. I understand that it’s daunting at first to put the numbers down, because who knows what reality will stare you in the face when you’re fully aware of your financial state? Maybe you feel you’re starting on a deficit, so it’s pointless to make these numbers behave. Or perhaps not… When you write it down, you’ll know for sure!


I’ve personally prepared a new budget for our own household every month, consistently for the last 84 months and counting… I’ve seen both the good and ugly parts of it. I understand that it may be scary in the beginning. But when you commit to the process, it will change your entire perspective. Let me walk you through this 4-step process:



This has been coined by Dave Ramsey as the zero-based budget. Income minus outflow or all your expenses should come down to zero. Not negative. Not even positive with some extra to spare. Just zero. It only means that every dollar has a name.

In your attempts trying to arrive at zero, just take note that if you’re on a deficit, then you’ll have to evaluate your expenses and identify line items to adjust. If it happens to fall on a surplus, then you should dictate where that extra money must go. It requires some trial and error so be flexible and patient in the process.



Consider your net pay and write down the actual amount that you bring in to your household. This is the amount that gets credited in your checking account if you’re set-up for direct deposit. Alternatively, this is the number that is on your paycheck stub. Your income makes up the left side of our equation.

You’re also answering the question ‘When?’ Consider your pay schedule? Is it bi-weekly, monthly, or an irregular cadence?

Another question that could sprout up after this step, which you should totally consider, but for now we place in the backburner… “How can I increase my income?” There’s separate planning that goes into this. Let’s get back on track to accomplish our immediate goal – and that is, to prepare a budget based on what I currently make.




Outlined below are the main categories of a typical budget. Every transaction clearing your account falls under one of these. This step enables you to stand a framework and organize your spending patterns.

• Charity
• Savings
• Housing
• Utilities
• Food
• Clothing
• Personal
• Transportation
• Health / Medical
• Insurance
• Recreation
• Debts

The heart of the exercise is to take each of these main categories, and then fill in the sub-items. Write down the line items that go under each one.  For example:

o Sewer Service
o Electric
o Water
o HVAC Maintenance
o Cellphone
o Trash
o Internet + Phone + TV (Bundle)
o Drinking Water



Communicate to your entire family what the plan is so that you are all on the same team. It’s a family effort. Recognize that there’s a period of fine-tuning your budget so that it depicts the actual situation. Start to observe and notate areas that need to be adjusted while you’re implementing this plan. Are your spending behavior and standard of living lining up with what you make? Bring your insights into the next budgeting session. It is a recurring monthly activity because, in reality, each month looks different!


You can take ownership of this process. Remember that the process does not own you. You control the variables. You’re taking the reign by doing this wise, courageous step of having a written plan.


Go ahead… Take a blank sheet of paper or pull up a new spreadsheet. Create a budget. When you do, you will feel financially empowered that you’re taking back control. You will learn to craft a plan and set goals that are beneficial for you and your family. It will feel good that you are intentionally tackling your financial affairs.


To put simply:
Step 1 is to understand the equation of a zero-based budget: Income Minus Expenses.
Step 2 is working the left side of the equation or accounting for your income sources.
Step 3 is working the right side of the equation or accounting for all of your expenses.
Step 4 is to execute!


A budget will help you avoid more debt. You can be precise about what you can or cannot spend, and make informed decisions. If you are quite overwhelmed at the notion of even starting a budget and feel like you can’t get your head above the water, all the more that you should do it. Negative emotions overtake positive behavior sometimes. But if you keep doing what you’re doing, you’ll get the same results you’ve been getting. Isn’t it time to change and evolve?


You’ll experience transformational growth in the process as you identify what’s broken and fix it. You’ll eventually be able to take a look at the numbers objectively, removed from irrational thinking. You’ll have clarity what areas of spending need to be tweaked or tamed. You will feel relieved and less stressed as you continue with this discipline. Every master was once a disaster. You can do it!






Shiela Bernardo is a budget nerd who is keen to stay on track with her family’s finanical goals.  She perpetually seeks to demystify how to keep the house clean. She is a business analyst by profession who is also a self-taught computer programmer. She blogs about family, faith, and finances in her spare time.