What budgeting approach feels realistic now for a family of four?

[ByPinkOP]

Budgets. I have seen some suggested budgeting approaches which seem outdated with the cost of living and relatively high housing costs, such as the 50:30:20 method. What seems like a realistic approach these days for a middle age (late 30’s) couple with 2 school age children?

Is this another stealthy wind people up about what middle age is thread?

Ultimately the level of savings has to come to what you can reasonably afford

Theres no point trying to save 20% of your take home income if it leaves you struggling to pay for a modest weekly foodshop and worrying about where the money will come from for the kids school shoes.

By the same virtue, no point complaining you can't afford to save if you have two premium marque leased cars on the drive with monthly leasing costs of several hundreds a month.

Work out what the cost is of a lifestyle that's comfortable for you, and have some wiggle room for unexpected costs. If there's money leftover? Save it

On a more helpful note. We don’t use any methodology. Finances are personal, we have quite a high risk tolerance for spending as we have secure jobs, insurance, healthy pensions etc. So we are comfortable not spending huge amounts on savings, and happy to prioritise experiences like holidays. For me money will always come, our youth and family time won’t, so because we have a mortgage, pensions, insurance etc we then focus on enjoying our time as a family while we have a young-ish family.

I don’t have a great income but enough just to cover everything usually during term time save a bit so can splurge a bit in the holidays as they’re only children once. Savings wise I have just enough for a couple of months bills and a new washer usually haven’t at the moment but will build it up quickly once schools are back

so I don’t use any methodology but do try and save where and when I can

Should say, I am talking ‘average’. ONS has this as a median net household income of £52k for the uk.

@ByPinkOPis that the average income for a family of 4 with school aged children though? Household income obviously varies by age.

I asked ChatGPT to draw up for a 7 day menu plan, for our health requirements within a budget. It did come up with what for us, is a fairly cheap shopping list from the major supermarket, which does our food deliveries.

This is really interesting. We have been pretty poor (years ago) and I have struggled to leave the mindset behind. So I guess it is why I am asking how people assess whether,
for instance, to buy the bigger house or the holiday, rather than to just save everything (and forget to live!).

I have to admit we prioritised the bigger house first (Covid was the push we needed for that, although we did opt to move to a much cheaper area to get more bang for our buck) and then when we continued to progress we prioritised holidays and experiences over savings. We had our children young, I’d never forgive myself if we’d spent their childhoods living frugally just to sit on a wad of cash when we’re 50. Life is for the living now, especially with children, so long as we’re still living within our means and not getting into debt I will prioritise the holiday over savings.

I don’t think that sort of rigid budgeting works these days. You would do better to do an soa (statement of account), divide expenditure into priority- mortgage/rent, utilities, food and non priority expenditure like entertainment, eating out, unsecured debts and try to put some into emergency savings.

That depends on how safe your job is and what you regard as more important. If your house is too small then if you have school age children they may need more room but then making memories is also important so holidays. Personally when our children were small we tried to do a holiday each year even if it was a cheap one so we prioritised that over a bigger house as our house was big enough for 4 of us. I would not focus on saving everything but would put something aside each month.

Even with your example of a late 30s couple with 2 school age children on an average income there's huge variation and you have to look at your individual circumstances.

If you live in an expensive area and have little equity in your home, paying for wrap around care, you could already be feeling stretched, such that moving somewhere bigger or spending on lifestyle could be difficult/unwise. Or if you live in a cheaper area and/or have a low mortgage due to inheritance, big deposit, previous higher income etc etc it could be doable.

Also need to consider preferences re lifestyle. If you could only have one of the bigger house or nicer holidays what would it be? How do you spend on things like cars, bills, groceries, clothes, grooming, days out, eating out etc etc. The range of costs for these can be significant.

How secure is your income. How likely is it you coul lose your job and how quickly could you get another one? If you were on long term sick, how long would you get paid for?

Remember that you can only spend each pound once and you should aim to spend less than you earn. Also plan for ups and downs in expenditure and save for irregular costs. Pay for cars, holidays, insurance etc with savings not debt where possible.

Look at the financial flow chart as a 'to do' list for money, this guides you through the steps in the right order.

ukpersonal.finance/flowchart/

Life is for the living now, especially with children, so long as we’re still living within our means and not getting into debt I will prioritise the holiday over savings.

I need to print this out and stick it to my mirror.

I struggle to spend. No debt. I’m a saver. I need to enjoy it while I can!