Having kids is one of life’s most beautiful and rewarding experiences—but let’s be honest, it’s also expensive! When you’re busy changing diapers, running to soccer practice, or trying to manage daycare, it’s easy to lose track of how much money is actually flowing out. The financial picture changes drastically once you have children, and that’s why the first step to a child-centered budget is to know where your money is going.
It’s important to step back and take a look. Knowing what’s happening with your money today is key to shaping your plan for tomorrow. Start by tracking your spending for one month—every coffee run, every Target trip, and yes, even those sneaky in-app purchases for kid’s games. This isn’t about feeling bad for what you’re spending but more about bringing awareness to your family’s specific needs and priorities.
Where’s the Surprise in Family Expenses?
Let’s face it: Raising kids is filled with all kinds of surprises. Most are wonderful, but every now and then, life just happens, and the “surprise” is a late-night fever that can’t wait until morning.
And don’t forget those random expenses: last-minute birthday parties that require a gift, school fundraising drives, or the impulsive purchase of cute (but not necessarily needed) baby clothes.
Pro tip: Keeping a small “miscellaneous” category in your budget specifically for these surprises can help you avoid dipping into savings or swiping the credit card.
Kids are wonderful, but they’re also little money magnets. Make a detailed list of your child-related expenses as part of your budget assessment. Make sure you include the ones you see every month and the ones you don’t always anticipate.
How to Start Tracking and Organizing
When my kids were little, I had no idea how much we were actually spending on diapers and baby food. It wasn’t until I tracked every expense for a month that I realized how much those little purchases were adding up. I thought, “Wow, no wonder we’ve been feeling tight with money—it’s the unexpected costs that are sneaking up on us!” Seeing it all laid out helped me feel more in control, and it made adjusting our family budget so much easier.
If tracking sounds overwhelming, don’t worry—you don’t have to do anything uncomfortable. Start with pencil and paper or the digital equivalent. The goal is to gain clarity. Just write down every expense—don’t leave anything out. Once you are comfortable, you can upgrade to something else.
There are plenty of tools to help you stay organized. Just use what’s comfortable for you. Budgeting apps are great because they can integrate everything and make keeping on top of your finances much easier. However, you don’t have to be in a hurry. I hung onto my Columnar four-column budget books until just recently.
Prioritize. Plan. Flexibility.
Sometimes, budgeting can feel like a no-win scenario. But the key is to focus on your family’s needs, set realistic goals, and allow room for flexibility—because life is the best change-up pitcher ever.
It’s easy to get caught in the trap of, sorry, I’m going to show my age here––”keeping up with the Jones’s.” And if I may, I’ll also borrow from Dave Ramsey, “Be willing to live like no one else now, so you can live like no one else later.” It doesn’t mean no fun; you just have to get creative. From my own experience as a kid and from my experience with my children, kids are delighted to have their parent’s attention and engagement. And those two things won’t break the bank.
Don’t get me wrong—your budget should absolutely include space for fun things in the short term and for dreams, which take a bit longer but are well worth the wait. But stay flexible—life with kids is unpredictable! Setting aside small amounts each month for specific goals helps keep you on track.
Short-term goal: Put away a little bit each month to plan ahead for back-to-school shopping. Come August, you’ll feel prepared instead of overwhelmed by last-minute expenses.
Long-term goal: Start saving for your child’s future, whether that’s college or another big milestone. Even small contributions now can grow over time and ease financial stress later.
Kids grow, priorities shift, and unexpected costs pop up. Your budget should be able to bend without breaking. Review your spending regularly and adjust where needed.
Pro tip: Consider setting up a “family fun” fund. Contributing even $20 a month can create a pot of money for spontaneous adventures—without derailing your budget!
Creating Budget Categories with Children in Mind
I remember when our kids were in school. There was a never-ending stream of people needing money for something; it was agonizing, frustrating, and stressful! If you’re anywhere near that place, it’s completely normal.
I’ll be honest with you: The solution isn’t glamorous or fun, but it will alleviate the stress of the inevitable. You have to plan, i.e., budget for these expected and unexpected nuances. When we began being honest with ourselves by putting all of the monetary realities of raising children into our budget, we were forced to face those realities and plan accordingly.
This is probably not what you wanted to hear, but it works. It’s different for each family because each family is unique, but if you commit, it will help.
You know the list because you’re living it, so I won’t include one. I will offer this bit of experience for you to mull over. The “extracurricular” activities are great and important to a child’s overall well-being; the same can be said for a child learning early in life that one can’t always have everything one wants. That said, there is absolutely nothing wrong with looking for budget-friendly options.
Planning for the Unexpected
If there’s one thing you can count on with kids, the unexpected will happen. Whether it’s an emergency room visit or replacing a torn backpack, unplanned expenses always pop up. It’s easy to feel unprepared, but you can take small steps to protect your budget from surprises.
a. Building an Emergency Fund
You’ve probably heard this advice before, but it’s especially crucial for families. Start with a modest goal—$500 to $1,000. Having this cushion for unexpected expenses (like car repairs or a broken appliance) will give you peace of mind. Once you hit that, aim to build 3-6 months’ worth of living expenses, factoring in kid-related costs like diapers, school fees, or medical expenses.
Tip: Automate savings into this fund so it grows without needing constant attention. Even small amounts add up over time. I cannot overstate this: Pay yourself first, i.e., save! We made this mistake for a very long time. There are almost always ways to save. You might have to sacrifice some luxuries (Starbucks, cutting back on how much you eat out, etc.), but I promise the benefit of doing these little things makes a big difference.
b. Insurance Coverage
Insurance is your safety net. Make sure your health, life, and disability policies are up to date and offer enough coverage for your family’s needs. Solid coverage can prevent a financial crisis if something unexpected happens—like an illness or injury.
- Health insurance: Consider raising your deductible if you don’t use it often, but ensure your out-of-pocket maximum is manageable. Note: having an emergency fund will allow for this approach.
- Life insurance: If you don’t already have life insurance, consider a term policy that would cover at least ten years of living expenses for your family if something happens to you or your partner.
Setting Long-Term Financial Goals for Your Children
Thinking about the future can feel overwhelming, especially when juggling everyday expenses. But setting long-term financial goals doesn’t have to be complicated or stressful. It’s okay if you’re starting small—what matters is that you’re starting. Here’s how to get on track for your child’s future needs without feeling like you’re falling behind.
a. Saving for College
This was an area we were totally unprepared for when it arrived! We hadn’t saved any money for college for our children. Wow, that’s hard to admit to all of you, but it’s true. If that’s where you find yourself, it’s OK. It was more difficult than it could have been, but all five daughters went to college. However, if you aren’t there, take it from someone who lived through being unprepared––do what you can now.
Even if you aren’t positive any of your kids will go to college (I wouldn’t recommend a 529 in that case), save anyway. There’s also nothing wrong with your kid(s) having some skin in the game. All of our daughters worked while in high school and college, and they still had time for all the extracurriculars. The goal is not to have any debt when they finish. Just don’t do nothing!
b. Teaching Kids Financial Responsibility
- This is another activity that I cannot overstate––teach your children to be financially literate! I don’t want to start meddling, but in my opinion, this is one of many parental responsibilities when it comes to raising children. I’ll leave the how up to you. Be creative! Your kids will thank you for it one day––ours did!
- Saving for big goals: Encourage them to save for something they want, like a new toy or activity, so they learn the value of delayed gratification.
Tip: Use tools like kids’ bank accounts or allowance apps to make it easy and fun for them to track their progress.
Adjusting Your Budget as Your Family Grows
If you will allow me, I’d like to borrow a line from James Taylor: “The secret to life is enjoying the passage of time.” I can tell you with complete certainty that life changes and that’s OK. If you take JT’s advice, it’s incredible! Make sure your budget changes with your family’s changing needs/circumstances.
a. Every Six Months
Looking at your budget every six months might seem unnecessary, but what I said above is, in fact, true. Your family’s needs will change as fast as time passes and as fast as they grow–evaluate your budget according to your new situation twice a year! You’ll be glad you did. If you do this without fail and take action, it will go a long way in lessening the impact of the expected and the unexpected.
• Tip: Set a reminder to review your budget every six months!
Practical Tips for Sticking to Your Budget
Time! Where does it go? With our kids, I felt like I had gone to bed one night, and they were all still little girls. But when I woke up the next morning, they were all grown, and we were grandparents. Trust me; it will seem like it goes that fast!
Sticking to a budget is tough, especially when life with kids throws unexpected expenses your way. Sometimes, it’s okay if you slip up—the goal is progress, not perfection. These simple strategies can help you stay on track without feeling overwhelmed.
a. Automate Savings and Payments
I’m probably in the minority on this one, but I hate automated payments. I don’t do them! I’m not advocating my approach; I just don’t like them. However, I do highly recommend automating your savings. It took me a long time to finally buy into the logic of “pay yourself first.” Please don’t make the same mistake!
It is critical, essential, life-changing; cut out the things you don’t need and put that money into your savings. You won’t regret it, I promise! I’m not saying it will be easy because it won’t be, but it will make a huge difference. I was shocked when I started tracking, physically writing, or typing out every expense. There were things I didn’t want to give up, but that’s the trap––mindset, you’re not giving anything up; you’re choosing to give towards something else.
• Tip: Set up automatic transfers to your savings account–pay yourself, a.k.a. your family first!
b. Do What Needs to be Done!
There was a time when I struggled (that seems like too soft of a word) with overspending! So, when I finally had enough, I decided to take temptation off the table. I didn’t carry any cash or cards on me––ever! Looking back, I realize that probably wasn’t the smartest thing to do. I’m not recommending you take the approach I did, but do what works for you.
Use actual envelopes. Create “buckets” in your bank account. Some apps have digital envelopes. Whatever you choose, the point is that when the money runs out in that receptacle, real or digital, that’s your cue to stop spending in that category.
Conclusion
There’s no two ways about it: personal finances are tough! I don’t know if you are old enough to remember this, but when I was a kid, they always had some guy on TV shows who was skilled in spinning plates on top of a bunch of skinny rods. I have to admit, I always wondered how they did it. Managing your growing family’s expenses can feel like that guy running from rod to rod to keep the plates spinning so none of them fall off. I am here to tell you that’s normal! And you are not alone!
The principles or disciplines discussed in this post aren’t magic, perfect, or easy. But they will make a difference if you let them.
The first priority is to get started. Use what we’ve talked about as a place to begin, and together, make a plan and commit to taking action to carry out your plan. Things won’t change for the better overnight; in fact, they might feel worse or at least uncomfortable, and that’s OK. Stick to your plan, making needed adjustments when they are called for—don’t just randomly or on a whim, make changes; give your plan time to work!
Make sure you celebrate the small victories! I can’t tell you how important this is for your entire family. First, it’s just plain fun. Second, when things get tough, and they will, it is more than helpful to remember your celebration together of hitting your last milestone. Those simple celebrations will fuel you to power through the difficult times!
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute financial advice. Debt consolidation may not be suitable for everyone, and individual circumstances can vary widely. Before making any financial decisions, consider consulting with a qualified financial advisor or professional who can provide personalized guidance based on your specific situation.