How to Create Large Family Budget On A Small Budget

Having a big family is an incredible blessing. However, it can be overwhelming to try to take care of everyone’s needs – especially when you don’t have the income to match. It can be stressful and sometimes, it leaves you feeling hopeless.

For years now, we have cared for a family of six with only one income. It’s difficult for my husband and me to both work as we have homeschooled our four children for 14 years now. We chose to make the sacrifice of living on one income so that we could provide our kids with the educational experience they deserve.

I’ll be the first to say that it hasn’t been the easiest journey, but it has certainly been an educational one for us. We have learned many ways to stretch a dollar and to get the bills paid, which is why I can tell you that you can have a large family budget with a low income. And I’m here to share some insight into how to do it. If you’re ready, we’re going to take it one step at a time.

Mindset

Before we jump into the work, let’s start with some understanding of what this is going to require.

Focus on Tiny Steps

First and foremost, understand that there is no overnight solution. The steps we’re going to discuss will take some time to put in place and reap the benefits, but they will help.

Think about it like this: Let’s say you decide you want to become an avid runner but you’ve never really done it before and you’re not in the best of shape. One workout is not going to magically change that.

Instead, you’ll have to start small. Maybe you’ll spend a couple of weeks walking up and down your street and doing some light cardio in your living room. Next, you’ll start jogging from your mailbox to the next one. The next week, you’ll jog to the next mailbox.

If you continue to make a little bit of progress each week, you’ll eventually work your way up to running a mile, then two, and then three.

Tiny steps each week will get you to your destination – whether it’s to become a runner, start a business, or get control of your finances.

No Two Budgets – or Families – Are Alike

This is not the time to compare your financial situation to someone else’s. They are not you. They do not live the same exact way you do nor do their kids have the same exact needs as yours.

And as you go through this article, keep in mind that not every tip will work for you. For instance, if you don’t pay for a gym membership, then a tip for cutting that membership won’t do you any good. The key is to put into effect what you can and let the other tips spur your creativity for other areas.

You Have to Commit

Having a large family budget on a small income will require time, planning, and preparation. It will also require discipline. You can absolutely do it, but you have some work to do.

One thing I have learned is that bringing the whole family in can help. When I sit my kids down and say, “Hey, we need to save $XXX for vacation,” they will be happy to be involved. They’ll help come up with ideas, double-check that lights are off in rooms that aren’t being used, and anything else they can to help.

I’m not saying that they get all of the details about everything, as I don’t feel it’s all their burden to carry. However, when they understand why we’re taking certain actions, they are much more willing to get on the ball with us.

Lay the Foundation

Now, let’s get down to business. You can’t create any type of effective budget without a foundational understanding of what you have going on in your financial life.

Your foundation needs to consist of two things:

what you have coming in + what you have going out

Get out a notepad and pen to list every bit of money you have coming in regularly. One-off payments do not need to be included as it’s not something you typically rely on. However, if you babysit every weekend, you can add that in.

As for what goes out, this will take a little more work. Most people do not know exactly what goes out of their homes. The regular bills are typically easy to remember. However, it’s easy to forget to count the candy bar and soda you purchase when you stop for gas, your kids’ snack money, and other small expenses. I cannot tell you how many times my Amazon Prime membership slips my mind when life gets crazy.

Sadly, these small expenses add up to a crazy amount of money over time, and they can have a big impact on your budget. To ensure you add in everything that goes out, you’ll need to gather your receipts and your bank statements. Ask your spouse and kids to help you remember. You should also consider keeping a notepad handy for a couple of weeks to a month so that you can write down every bit of money you spend.

Don’t Forget the Extras

“The extras” include several items that most people overlook when budgeting, but they are a vital component of a successful plan. That’s because if you don’t plan for them ahead of time, your entire budget will be thrown off track. Extras include things like:

Birthdays
Holidays, including Christmas, Valentine’s Day, Easter, Thanksgiving, Halloween, and anything else you celebrate
Oil changes
Tax payments
Annual tag registration
School supplies
Kids' clothes
School dances
School field trips

List these things and anything else you can think of that comes about. You might not know the exact amount of everything, but even an estimate can give you something to work with.

Add In Your Goals

Write these things down along with an estimate of how much you need.

I’m willing to bet that there are some things you really want to accomplish with your money – outside of simply surviving, I mean. We all want to do things like go on vacation, buy a house, pay off debt, send our kids to college, start a business, and, well, retire someday.

Time To Calculate

Now’s the time to get a feel for where you stand and how close you are to what you need. We’re going to work this out by determining how much you need every year. Some of the things you listed, such as Christmas, should already be listed as an annual number.

The others will require you to multiply them to get an annual number. For example, your monthly bills will need to be multiplied by 12. Your oil changes will need to be multiplied by three or four, depending on how often you get them. If you spend $30 a week on coffee, you’ll need to multiply that by 52.

Once you have an annual amount for all of your bills, expenses, goals, and anything else you add to your budget, add them up for a total. Now, compare that to your annual income.

Do they match? If not, you have some work to do and the following sections can help. If so, you can skip down to the “Put It Together” section.

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Shave It Down

If you need more than you make, don’t let it get you down. You’re not alone in that, and you can do more than you know. We’re going to walk through some money-saving tips and strategies so you can make your budget work.

Before we do, though, there’s something important to understand. You don’t have to cut everything you need out of one category. Every penny you can save adds up and makes a difference.

For example, let’s say you need $5,000 more per year. If you divide that by 12 months, you need to cut back by about $417 per month. If you have 12 categories of spending, you only need to cut out $34.75 per category each month.

This may seem like a lot of money to cut out, but it’s doable. As we dig into the tips and strategies, you’ll likely find it’s much easier than you think, so let’s get started.

Food

The food category is one of the easiest to target. And, truthfully, you could potentially cut out the entire amount you need through the food category.

Most people spend money on food through three basic avenues:

Dining out
Groceries
Convenience purchases, like at gas stations and the snack machine

Dining Out

How often do you eat at a fast-food restaurant or eat-in restaurant? How many times do you stop for coffee? Think about this carefully, and add it up.

Many people think that they only spend a few bucks here and there. However, when they stop and add it up, they find that they actually spend thousands of dollars per year eating out of their home. And the most common reason is that life is busy. When you leave baseball practice or dance class at 8 p.m., no one wants to have to go home and cook.

What if I told you that you don’t have to, though? What if I told you that you could still eat out some while easily providing home-cooked meals most of the time? You can do exactly that by implementing the following:

Determine how many nights each month you eat out. Divide that by four, and limit yourself to eating outside of your home to that number of times. You might choose specific times that you hit the drive-thru, like after one practice or game each week or on Saturdays for a family outing.
Make a meal plan for the rest of the month. It can be as simple as you want it to be. The key is to have a plan and prepare. Lay out any meat to defrost the night before. Put all the ingredients on the counter, except for any perishables. And be sure any dishes you need are clean. Steps like this make it much easier to cook at the end of a long day.
Utilize a slow cooker. These things are invaluable. You can get your dinner cooking on low in the morning and it will be ready when you get home.
Cook in bulk. I usually make one large crockpot full of vegetable or chicken soup each week. My family will eat on it for at least three days. I also quadruple my recipe for things like homemade waffles and sausage, egg, and cheese burritos. Anything my family doesn’t eat the first day is frozen for them to munch on all week.

Steps like these help in a few ways. They ensure your family is eating healthier foods most of the time. It saves you money. And when you cook in bulk, it saves time throughout the week. There are some weeks I don’t have to cook more than one or two times with these steps – and three of my kids are teenagers, which means they eat all the time.

Groceries

Buying groceries is necessary, so you can’t just mark the task off of your list. You can, however, be very strategic about it by understanding one very important thing: Americans spend more than $5,000 per year on impulse purchases – up to 70.5 percent of that being on food.

Did you get that? Thousands of dollars of your family’s hard-earned money is blown, thanks to the marketing efforts of your local grocery store. How can you combat this? There are a few ways.

Every couple of months, I make a list of everyone’s favorite meals. It’s pretty much the same list, but I know that tastes change, so I double-check that everyone’s still on the same track. Once a month, I determine what’s already in my kitchen that I can use to make those meals. Then, I take the list of meals and my inventory to make a menu.

From there, I make a list of what we need for the whole month. This keeps me completely on-track when shopping, ensuring I don’t buy anything I don’t need.

2. Shop Online

This is my favorite way to shop. You can pretty much completely cut out the impulse purchases if you shop online because you aren’t seeing most of those extra things. Sure, you see some, but it’s limited.

3. Carry Cash

Take a look at your list, estimate how much it will cost, and get that money out of your bank. Leave any cards at home. Doing this will force you to either stick with your list or choose an unplanned item over one on your list. In either case, you stick to the amount you plan to spend.

4. Be Aware

If you are shopping in the store, it’s important not to get swept up in “sale prices.” Some items have been marked up right before the “sale” so that they can make it look like you’re getting a deal. If you know how much an item normally costs, you’ll know when it’s really a deal and when it isn’t.

If you don’t know how much the item normally costs, there is a good chance you don’t normally buy that item. In this case, you probably don’t need it anyway. Even a true sale isn’t a good deal if it’s not something you need or something you’ll actually use.

5. Buy In Bulk

The fewer times you have to go into the store, the less money you’ll spend. Buying in bulk not only saves your family money but also limits your visits.

Conveniences

Forego the coffee runs, the vending machines, and the gas station candy bars. Instead, invest in a good coffee maker and travel mug. Stock up on your favorite snacks and candy at the grocery store or online. If you didn’t know, Amazon has some great bulk packages of candy and snacks.

Regular Bills

There are many ways to cut down on bills. Below are just a few ideas to put into effect.

Shop around for car insurance: When your policy is coming to an end, call around for rates with other companies. There is a good chance that you’ll find a lower price.
Keep in touch with your insurer: If you have a teenager with a permit, most insurers automatically upgrade that to a licensed price at policy renewal. This will shoot your insurance rates through the roof. If your teenager has yet to get their license, be sure you let your insurer know at renewal.
Consider moving if your rent is too high: Many large families pay extra to rent a bigger place, but this isn’t necessary. I know space is awesome, but it’s possible to make a small space work. My daughters share a small room, but we make it work because we invested in loft beds. They each have a whole area beneath their beds for their desks and toys.
Consider moving if your utilities are too high: When you’re on a tight budget, taking the place with the cheapest rent seems wise, but it can often backfire. We recently moved from a cheaper place that was not in great shape. The lack of decent insulation and other issues made our power and water bills run at about $800 per month – more than the payment. The payment in our new place is about $200 more, but our utilities are only about $300, which saves us a great deal of money.

Clothing

Let’s be honest: kids grow insanely fast. Every time you turn around, they need new clothes and shoes. It can be difficult to keep up with – and expensive – unless you’re prepared and strategic. Here are a few steps to help:

Embrace secondhand: Thrift stores and consignment shops have some great clothes at great prices. And if your kids are embarrassed about shopping in such stores, just don’t tell them where you bought them. And consider trading clothes with friends who have kids that wear those sizes.
Keep sizes on hand: Every month, check your children’s clothing and shoe sizes – and determine if those sizes are still comfortable. Write the sizes down or put them in your phone. If you happen to be out and run into something good at a low price, you can grab it.
Pre-buy: I have a container in which I put future clothes for my kids. Sometimes, I’ll find a shirt on the clearance rack for $1 that I know one of my kids will wear in a few months. Or at the end of a season, I’ll hit the girls’ clearance racks for dresses that are a size or three too big. I put them in the container and pull them out when it’s time.

School Supplies

I go through a similar process for school supplies. Every year, retailers buy more than they sell. A few weeks after school starts and everyone’s done shopping, those items go on sale – really good sales.

I rack up on pens, pencils, binders, paper, glue sticks, scissors, and anything else I get my hands on. For a fraction of the cost, I keep all the supplies we need for the entire year.

Activities

Society makes parents feel as though children should be involved in every activity available to them. Guess what: they shouldn’t, for a number of reasons.

First and most importantly, every outside activity your kids are involved in takes time away from the family unit. Kids need more time with parents – not less.

Secondly, each activity takes time away from school and just being a kid. I knew a family who had two boys. They were in baseball practice every afternoon with games every Friday. They didn’t get home until time for showers and bed. They were exhausted all of the time, missing out on playing with their friends, and having a hard time finishing their homework. I’m not really sure how any of that helped them.

Lastly, each activity costs money. Fees, uniforms, travel, supplies, and every other related cost adds up. The more activities, the more money.

Now, to be clear, I am not saying that you should keep your kids from activities. I am saying that they don’t need to be involved in everything. Put a limit on it.

And ask them how they feel about their activities. Many kids don’t want to be involved in half of the activities that they sign up for. If you ask them how they really feel, you might be surprised to learn that they would prefer to be home more often.

Put It All Together

Hopefully, these tips have given you some areas to cut down on, and your income and outgoing are beginning to match – or at least get closer. Remember, though, that you’re not going to fix it all overnight. It may take months or more to get it all straightened out.

However, you now have an ideal budget to work on, and if you keep working, you’ll meet it. In addition to cutting expenses down, you might adapt your goals to some degree or find a way to increase your income a bit.

Once you have gotten your income and outgoing money to match, it’s time to put it into a workable plan. One of the best ways to stay on top of your finances and not be thrown off of your budget all the time is to follow these steps:

Take your annual expenses and divide that by the number of checks you get. If you get paid monthly, you’ll divide it by 12. If you get paid weekly, divide it by 52. That is the amount you need to pay out or save each check.
Pay on your bills with each check instead of paying all at once. If your power bill runs $200 per month and you get paid every week, pay $50 as soon as you get paid. This will help ensure the money goes where it's supposed to instead of getting spent on something else.
For items you aren’t paying out right away, you need to designate a place for the money. Let’s say you plan $1200 per year for clothes and shoes and you get paid monthly. That means $100 per month needs to go toward clothes and shoes, but you might not need anything at that moment. You can either stuff that cash in an envelope or in savings so it’s there when you need it. Just be sure that you know what that money is for so you don’t spend it elsewhere.
Be sure to revisit your budget regularly. Check your progress and determine if you need to make any adjustments.

Use Budgeting Tools

Paper and pen can be incredible – I absolutely love working things out and running calculations this way. However, I also love and value technology.

Using budgeting tools can help you more easily track your expenses and stay on top of your budget.

The Goalry Mall is full of tools to help you keep track of and meet your financial goals. From setting up and following your monthly budget to accessing your accounts and paying off debt, Goalry has a tool for it.

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Conclusion

Having a small income doesn’t mean you can’t care for your large family. While it does take time, commitment, creativity, and plenty of trial and error, you can create a large family budget on a small income.