Family Finances Guide - cashfloat

Find out how to create a budget for your family and get in control of your finances. In this guide, you will learn more about managing your finances at different stages of your life.

Get in Control of Your Family’s Finances

Who doesn’t want to be in control of their finances, and especially when they have a family to look after? With a budget, you know how much is coming in, where it is spent, what you are saving up for and how much you save each month. You’re prepared for whatever surprise the day might throw at you and have no need for a short term loan. Sounds like a dream? Well, Cashfloat has prepared this clear and in-depth Family Finance Guide to help make this a reality for you.

Some families live from one month to the next with little or no money available for savings. If we aren’t been taught the tenets of good financial planning, it is not too late. We can start today. In fact, we must, because a dependency on credit cards, or personal loans, creates a debt burden, and one that must be understood to avoid the possibility of bankruptcy in future. (To learn more about bankruptcy and what it means, visit this guide from the Insolvency Service).

What are the biggest expenses for a family?

The biggest expenses for a family in the UK can vary depending on their specific circumstances and lifestyle choices. However, some common expenses that many families face include housing costs, childcare, education, transportation, and food.

  1. Housing costs: Housing is typically the largest expense for most families. It includes mortgage or rent payments, property taxes, insurance, and utility bills. The cost of housing can vary significantly depending on location, size of the property, and whether it’s owned or rented.
  2. Childcare: The cost of childcare is a significant expense for families with young children. This includes nursery fees, childminder costs, or after-school clubs. Childcare costs can be substantial, especially for families with multiple children or those living in urban areas.
  3. Education: Education expenses can be a major financial burden for families. This includes school fees for private education, uniforms, textbooks, and extracurricular activities. Even in the state education system, families may incur costs for school trips, tutoring, or additional educational resources.
  4. Transportation: Transport costs include fuel, car payments, insurance, maintenance, and public transportation expenses. Many families rely on cars for commuting and running errands, which can be costly. Additionally, public transportation expenses can add up, particularly for families living in cities.
  5. Food: The cost of groceries and dining out is another significant expense for families. This includes regular grocery shopping, meal planning, eating out, and special occasions. The cost of food can vary based on dietary preferences, family size, and location.

It’s important to note that these expenses can differ from one family to another based on individual circumstances, lifestyle choices, and location within the UK. Additionally, families may have additional expenses such as healthcare, insurance, debt repayments, and leisure activities that can impact their overall budget.

"Personal finance is only 20% head knowledge. It's 80% behavior!" Dave Ramsey - Cashfloat "Personal finance is only 20% head knowledge. It's 80% behavior!" Dave Ramsey - Cashfloat

What financial support is there to help families?

It is important to research and be aware of the financial support and government provision available for young families, those with disabled children, and people on low incomes. There is also a range of UK government-backed schemes to help working families with childcare costs.

Make sure to stay up-to-date with changes to government policy and legislation, not only to ease straightened circumstances, but to make sure the family is not suddenly exposed, should a benefit be reduced or phased out.

Work together to manage money

Shopping around can contribute to reducing expenses, and a budget enables a family to save some money each month, or avoid depending on credit cards and loans. Analyse the bank statements to see where money is going. Are there subscriptions you don’t need? Or could a new purchase be bought cheaper from a different retailer, or online? Price comparison sites are really useful when assessing quotes for insurance.

Even the happiest couples can hide secrets about spending money if they do not share the same values as their partner. A joint approach to family saving and spending is one way that money can be managed more effectively. If this happens there is less chance of divisive arguments about who has spent the most and this means less stress all round.

It's important that everyone works together to manage the money. - Cashfloat

Everyone should be on the same page about family finances

It would be a good idea for everyone to be on the same page about family finances. Unfortunately, this is the one aspect of a relationship that often gets left behind when people decide to live together. Some view the idea of a prenuptial agreement as too materialistic; likewise, having an in-depth discussion about money may feel like it takes the romance out of life. However, if people do sit down and think about how they will manage their finances when they start a family, or when an emergency arises, they will be far more prepared.

Involve children in financial decisions

It is important to involve all family members in making the best of the incoming money. This should also include the children. Parents and educators can teach children the value of money and how important it is to make the best of what is available. Practical ways to do this include:

  • Giving them a small, fixed amount of pocket money each week, and encouraging them to save it for something they want to buy
  • Talking to them honestly about what you do to save money and work within a budget
  • Encouraging them to be self-aware about things like wanting the latest trainers or football shirt. Remind them that material possessions are temporary, and don’t reflect a person’s character
  • Being positive and supportive about their career aspirations, regardless of the typical income or lifestyle typically attached to them.

This approach promotes the likelihood of children growing up with an independent outlook. 

How are you monitoring income and expenditure at the moment? If transactions are primarily from one current account, it is a worthwhile exercise to download a monthly or annual report as an Excel spreadsheet, and analyse it. A thorough analysis does not need to be complicated. It might simply be:

  • An Income tab. This splits all receipts into named categories: Earnings or Income, Interest Received, and Refunds
  • An Expenses tab. This splits all spend into named categories: Food, Tel/Mobile/Broadband, Everyday Leisure, Insurance, Holidays, Utility (Gas, Elec), School/Education. Adjust to suit your circumstances.

Check the totals of your analysis add up, to make sure there have not been omissions or mistakes. The beauty of a historic analysis like this is that it shows very plainly the family’s real income and spend, and not what is hoped for or imagined. With these numbers in mind, a realistic budget for the future can be set.

Short, medium and long-term planning

Understanding how to plan for family finances is a complex subject. Sit down with a pen and paper and discuss the situation with other family members. Make sure everyone can make some inroads into having a say about what the future holds. You don’t have to accept that there can be no changes, and that your financial security is left to chance.

Financial planning for a family should include a budget for monthly expenses, plus a set amount to be put away each month in a quick access savings account. These savings should be kept to pay for unexpected occurrences like car repairs or replacing appliances. In addition, long term planning should include some provision for the children’s education. It is important to set aside some money even if it is only to pay for school uniforms or school trips. In the long term, families should try to look far enough ahead to cover the possibility of redundancy or long term illness.

So far, we have made a brief mention of the many different aspects of family finance. We have a wide range of articles covering every topic in much more depth. For your convenience, they are all just one click away. Look through the following titles, pick an article, and enjoy!

Cashfloat - Helping you with your family finances, one step at a time. Cashfloat - Helping you with your family finances, one step at a time.