11 Things to Consider When Starting a New Budget

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One of the hardest things to do when you are beginning a new budget or starting on the pathway to being debt free is figuring out what a budget looks like in real life.

How do you break it all down for your family expenses? After all, we all vary in our needs and priorities, and honestly, it’s something that doesn’t come naturally for most. I know that from personal experience and applaud you for taking this step towards being financially responsible. In addition, I look forward to hearing about the success you will have as you move forward with your own, family-specific budget.

Even for those who have been budgeting a long time, this is a great reminder that budgets are fluid – they have to change as your life changes. Have a new baby? The budget won’t be the same as it was with only two adults. Added three cats to the household or lost a job? The budget will need to be adjusted accordingly.

If nothing has changed in your life, but you’ve been using the same budget for the past three decades and it’s no longer working for you – sometimes starting again with a clean slate can help you move forward and achieve those seemingly out-of-reach goals. This is a good opportunity to do so.

Tip: Creating and maintaining your family budget shouldn’t be hard. Grab my FREE Family Budgeting Workbook to help you get (and stay) on track! Find it HERE.


The first step in starting a budget is to figure out how much money you make each month. For most, this is the amount of money that gets automatically deposited into your checking account each pay period (your net income). For some, this includes paychecks only, but for others, it could be a mix of paychecks and supplemental income (including social security or side business income).

First things First

When you start your budget I highly recommend that you look at the categories of giving, housing, and food first, before you work on the remaining categories.


Recommended: 10% to 15%

I always start any budget I make with what I am going to give, knowing that I am asked to give the first of what I receive, and not what is left over.

Proverbs 3:9 – “Honor the Lord with your wealth, with the first fruits of all your crops; then your barns will be filled to overflowing and your vats will brim over with new wine.”

The standard amount for giving is 10 to 15 percent. For the purpose of just starting a brand-new budget, I suggest aiming for 10%. Giving in any amount is better than not giving, however, so pick an amount and just get started. Of course, the dollar amount should increase proportionally as your income increases.


Recommended: 25% to 35%

Housing costs (i.e. your mortgage or rent payment), should remain under 35%. Why 35% you ask? I believe that if the bank won’t loan you more than 35% of your income for a home loan, then that should be the maximum amount that you spend. Even then, I’d like to say this is too high, and sticking with a budget of 25% is a much more reasonable choice.


Recommended: 10% to 15%

I’ve talked about budgeting for food. This really depends on where you live, what the cost of groceries are in your area, your food allergies (and those of your family as well), and whether you are a gourmet chef in the kitchen.

A reasonable amount of money for food (for my own family) is approximately $100 per month per person, and I budget $400 total for each month. This might not seem like a lot, but, trust me, it is doable. Of course, if you have fewer than four people in your home, then you would ideally spend less than that each month.

Keep in mind that if you are spending more than the allocated 10 to 15 percent of your income on groceries, then that money has to be deducted from another category in your budget. So, while you may need to spend 20% of your budget on food, you will have to figure out which of the remaining categories you will spend less on in order to accommodate that extra expense. (For example, you might need to cut internet or television to make up that expense).

Other necessities


Recommended: 10% to 15%

If you missed my emergency fund post, in which I detailed how incredibly important it is to have savings to cover unexpected expenses, check it out here. If your emergency fund is fully intact, then saving between 10% to 15% of your monthly income is a great place to start. Of course, if you are currently in debt, pay that amount off first. I can’t stress it enough that striving to get out of debt is critical to the long-term success of your finances.


Recommended: 10% to 15%

The importance of transportation in your budget depends on what you need it for. My husband drives 100 miles round trip each day for work and he is the primary breadwinner, so transportation is critical to us having his income each month. If you can bike to work or have only one car, then your transportation budget will likely be less than the average. We live in a fairly decent-sized city and often find ourselves driving 30 minutes or more for fun activities or to visit relatives or friends.

Ultimately, transportation, including gas, car payments, and any car maintenance, should be around or less than 10% of your budget. With a $3,000 income per month, that is a total of $300 per month for transportation purposes. I will be the first to tell you that we have much more than that for car expenses each month – make sure it works for your own family, simply remembering that if you are spending money on transportation, it is money you aren’t saving, using to pay off debt, or putting aside for a family vacation.


Recommended: 5% to 10%

I’d like to say that we can dictate what we spend on utilities each month, but we all know that’s just not the case. When your electricity bill comes in, you don’t get to choose what you would like to spend on electricity this month. Rather, you are responsible to pay for it, in total.

Granted, sometimes (and I mean sometimes) we can make adjustments that allow us to pay less on our utility bills. For example, in the bitter cold of winter, you could put an extra sweater on, or layer up in blankets at night time. The issue with this comes when you decide to keep the heat too low, and your pipes freeze, requiring an expensive call to the plumber. The same rings true for cutting back on water usage in the summer: it’s all fun and games until the entire backyard is a yellow-brown color instead of green.

In a perfect world, we would spend no more than 5% on utilities. If you are living within your means as far as housing costs (rent and mortgage), then the utilities should be proportional, and likely will stay within this percentage.


Recommended: 10% to 15%

This includes any kind of insurance that you currently have, including life insurance, home/renter’s insurance, health insurance, and car insurance. Keep in mind that you are only budgeting your net income, so if you pay for life or health insurance out of your gross income and it comes out before your paycheck hits the bank, then it doesn’t need to be included in this calculation. Likewise, if your home insurance is included in your mortgage payment, then leave it in that category of your budget. Ideally, you should not be spending any more than 5% to 10% per month on insurance.


Recommended: 5% to 10%

When Justin and I first began budgeting, he was fresh out of cancer treatment, and the fact that we had no money and terrible insurance meant that the bills piled up quickly. We put a payment plan together with each medical organization we owed money to and worked hard to pay it down in a timely manner. The nice thing about medical bills is that, typically, they don’t come with interest as long as you are paying the minimum scheduled payment. Let them go to collections, however, and that’s an entirely different story.

Fast forward twelve years and we are able to pay medical bills as they come through the door, but only because we put money into a “medical” category each month in anticipation of those bills. Some months we have no medical-related expenses, and other months we use the money to cover costs including prescriptions, over the counter medications, and copays.

Set a little aside each month to use towards medical expenses when they arise (we recommend 5%), and going to the doctor or needing a prescription when you are sick won’t destroy your budget. Granted, if a major medical expense comes up, this small fund might not be able to cover it, so make arrangements at that time to have a monthly payment that falls below your budgeted amount.



Recommended: 10% to 15%

The personal expense category is one that is either completely eliminated in a struggling budget, or frequently overspent. No matter where you are in your budget, if you are able to cover your food, clothing, and household expenses, and still have money left over, then budget around 10% for items including shaving cream, shampoo, cleaning products, haircuts, and anything else that isn’t already included in one of the above categories. If you do, you will be able to enjoy that new haircut without concern over what that means for the rest of your budget this month.


Recommended: 5% to 10%

Planning a summer vacation with the kids or a getaway for you and your spouse? This is the money to cover those expenses. Plan at least 5% and, when you are debt free and your emergency fund has its full amount, try to work up to the 10% mark. Vacations and time away from everyday tasks are incredibly important for our well-being as individuals, couples, and families.


Recommended 0%

In a perfect world, you would have no debt and therefore, no monthly payments to counteract it. If you do have debts to pay down, use any and all extra money to pay it off as quickly as possible, even forgoing vacations and personal expenses if possible until that time. If you are already debt free, disregard this category completely and do your best to remain that way.

Tools and Additional Assistance

I look forward to hearing about both your frustrations (there are always frustrations when it comes to money) and successes. Leave a comment below or contact me directly! Also: I love to include guest contributors, and today’s artwork was specially created by my daughter, Rebecca. Give her a little shout out in the comments if you enjoyed it!

Tip: Creating and maintaining your family budget shouldn’t be hard. Grab my FREE Family Budgeting Workbook to help you get (and stay) on track! Find it HERE.