I’m often asked how I budget, and I have to laugh because the younger version of me was probably the last person who should be handing out this type of advice. In fact, when I turned 18 and got my first credit card, I promptly went out and maxed it, then spent the following two years trying to pay it off.

It was a learning experience, to say the least.

Now, I’m happy to report that I’m a lot more responsible with money. I think being a mum forces you to plan better – but unfortunately, budgeting is just one of those things we don’t really learn in school. So I had to teach myself.

You might not be able to follow how I budget right down to the last detail, but I think the general approach should work well for most types of families. Let’s have a look.

Your rainy day fund

Before you get into setting up your monthly wage split, you need to have what I like to call a “rainy day fund” already in place. Ideally, you’ll have 4 to 6 months of expenses in here, although I recognize that isn’t always feasible when you’ve been living paycheck to paycheck. 

Try to put away enough to cover at least a few months of expenses here, but perhaps more importantly, leave it in an account that’s not too easy to access so you can’t just whip out a card and make impulse buys online with this fund.

Once that’s set up, you’re ready to start splitting your wage every month. Here’s the simple 4-step method I use to budget for my family.

1.Bills account

List all the regular bills you get during a typical year and add them up, using last year as an example if applicable; go by what you’re expecting this year if your situation has changed significantly. This will include expenses like phone and internet bills, car and insurance expenses, loans or mortgages, and gifts. Divide this number by 12, and that’s your bills account number, and what you should be putting aside monthly.

2. Long-term savings

This is where you’ll put money for big-picture expenses you’ve been working toward, like getting a new car or starting a home business. Divide how much these things will cost by the number of years left until you need the money, and then divide that figure by 12 to reach your long-term savings number.

3. Short-term savings

This is for those smaller and more achievable goals, such as a weekend getaway, fun family excursion or a new coat. Decide how much you want to devote to these expenses and set it aside. I cannot stress how important it is to get this set up! It will help you spend money on meaningless things, which, as little as they might cost can really add up! Besides, saving up is no fun if you’re only using the funds for adulting, is it? 😉

4. Spending power

Whatever’s left each month after you’ve set aside money for steps 1-3 is your spending power. You’ll need to subtract the amount you spend on groceries, and then the rest is your “fun” money for things like entertainment and smaller impulse buys. Depending on what your financial needs are, you can then divide this to use a portion for home use, and a portion for personal use.

My approach may take some work to set up initially, especially the part where you add up your typical yearly bills, but once you’ve done all the calculations, you’ll be on autopilot. When your wage comes in each month, just divide it up and put all the money where it needs to be, and you’re done. It’s as easy as that!

This is how I budget, and I find it works better than other methods I’ve tried. I hope you can apply it to your own budgeting and keep the family finances running smoothly!

PS: If you want to watch me explain this in a video, here’s a YouTube recording I have on my channel.

Also, it’s good to note that right now, I’ve activated what I’ve called our corona budget (but really, what else could I call it? 😆). We’re spending more on groceries budgeting more towards our water, electricity & gas, but not spending much on anything else really. We’re saving up what’s leftover, into a separate account you could say (as we really do not know what it’s for for now!)

I hope you find this useful – as you could definitely take this time to set up this system!

Much love,

Nakita xxx