How We Manage Our Family Expenses
“Spend Less Than You Earn and the Result is Happiness.”
Back in 2017, we found ourselves with a steady income, a house of our own, and our first child—yet, we had no clear financial direction. That’s when I came across The Barefoot Investor. One key takeaway was the importance of budgeting, not just to get your expenses in order, but to build a strong foundation for wealth. So, I created a budget.
Our expenses so far for 2024, which I am sure they'll be further twists and turns ahead
Now, I prepare the next year’s budget about six months in advance, tweaking it along the way. It may sound obsessive, but unless you know where your money is going, how can you realistically achieve your financial goals? Think of it like running a business—wouldn’t you want to know where every dollar is being spent?
Dealing With the Unexpected
Tracking my budget for several years has allowed me to spot trends, making it easier to predict future expenses. Of course, life throws curveballs. In 2023, for instance, I didn’t foresee that we’d be moving, which meant paying both rent and a mortgage. Our budget didn't reflect this at first, so I had to adjust quickly. Now, I try to overestimate expenses to account for life's unpredictability.
How I Set Up Our Accounts
I keep things simple. My pay goes straight into a splurge account, and based on the budget, I have an automatic, fortnightly transfer that allocates funds to our expenses account. This way, I ensure we cover what we need to while keeping spending under control.
Breaking Down the Essentials
Let’s dive into the specifics. Our utility bills—gas and electricity—are with Energy Australia, and every quarter I run a quick check on Energy Made Easy to see if there are better deals. I recently scored a discount on both gas and electricity. Plus, I can’t wait to get solar panels on our future home and say goodbye to electricity bills!
When you log into your Energy Australia account you can compare your current plan under the 'plans' tab and then click 'Compare and switch plans.'
Water and Council Rates
Our water and council rates have remained consistent, making them fairly easy to predict. We do pay a sewage access fee on our vacant land (day light robbery), and since council rates are set annually, they’re one of the more stable expenses in our budget.
Technology and Communications
Our tech expenses are an area I’m quite proud of. We’re with Coles Mobile and Amaysim, paying just $120 each per year for our phone plans. Absolute bargain! For internet, we pay $70 per month with Spintel. Spotify is our only real luxury, costing us $22 a month. Not bad, right?
Private Health Insurance and Medical
Our healthcare costs have increased recently. We used to only have ambulance cover, but as our joint income approaches the Medicare Levy Surcharge threshold, I signed us up for basic corporate private health insurance through Bupa—strictly for tax purposes. I also put aside $220 per fortnight for medical bills, which is enough to cover any surprises.
Gifts
We’ve scaled back on gifts. Back in 2020, we spent $1,800 just on birthdays and $1,300 on Christmas. Now, we budget $1,800 for both combined. We’re all about the “less is more” mindset these days, which has really helped rein in costs.
Schooling and Sports
Our kids’ activities—athletics in summer and soccer in winter—bring consistency (that word again!) As for schooling, we now pay school fees, something we hadn’t done before, but it was a choice we made to give them a better environment. The right school is important to us, and we’re happy to make the investment.
Clothing
We focus our clothing budget primarily on the kids. Any clothes for my wife and me come out of our personal splurge accounts. My wife often treats the kids to clothes from her own money too.
Food Shopping
Food expenses have gone up over time, especially with two growing kids and our recent switch to ordering weekly organic groceries. We’re averaging around $350 per week. Meal planning has been a huge help—I honestly don’t know how families manage without it! While I’d love to see this cost come down, my goal for now is, yes, you guessed it, consistency, as we find a sustainable balance in our grocery spending over the coming years.
Rent and Mortgage
Our rent and mortgage together account for over 50% of our expenses, a temporary strain while we rent and await clarity on our future home. Rent may feel like dead money, but for now, it's a necessity. If you haven’t already, check out my post called The Half a Million Dollar Question for context. Our mortgage is with IMB at 6.090%.
Travel and Transport
The "cars" category, covering fuel, registration, and maintenance, has naturally increased since we moved to a more rural area. The 30-minute drive to our kids' school and our regular trips back to Camden to visit family or get the train to work add up. To offset some of the fuel costs, I try to catch the train into Sydney from Bundanoon for work at least twice a week.
Summary
By approaching budgeting with discipline and flexibility, I’ve managed to keep our financial goals on track, even during uncertain times. While life can be unpredictable, having a clear plan has given us a sense of control and confidence.
Cash Buffer: The Key to Budget Stability
One of the most important elements of our budget is a cash buffer. This gives us the flexibility to handle the peaks and troughs of expenses throughout the year, allowing me to transfer a consistent amount into our expense account every fortnight. At this point, I feel like we’ve maximised the portion of our take-home pay that goes toward covering expenses while still prioritising family trips and holidays. So, any additional needs will have to be met from our emergency fund or savings.
What About You?
I’d love to hear how you approach managing your household expenses. Do you have any tips, or have you found other ways to manage financial ups and downs? Feel free to share your budgeting tips and experiences in the comments below—let’s learn from each other!