Running a six-person household takes a lot of work and planning. Someone always needs something. The kids need school supplies, the car needs a tune-up, Mom and Dad need a night away. All this requires money, and if you don’t anticipate and plan for these needs, your money can seem to just disappear. While many types of budgets exist, a zero-based budget allows you the most control over your money. In a zero-based budget, you spend every dollar you earn on paper before the month begins.
Write your household’s total monthly income in the top-left corner of a sheet of paper. Include income from your job, your spouse’s job, child support, any part-time job income and any other source of incoming money each month.
Create a column of expense categories along the left side of the page. Make a category for anything you will spend money on during the course of the month and list expenses in order of importance.
Pay yourself first. Put between 5 and 10 percent of your household income into savings each month. The savings category of your budget includes money market accounts, mutual funds and retirement accounts. Also, with four kids potentially needing further education in the future, you'll want to start funding their college accounts as as soon as possible.
Allocate 25 to 35 percent of your income for rent or housing expenses. This category encompasses insurance, property taxes and repair costs as well as your rent or mortgage payment each month.
Estimate fluctuating expenses to the best of your ability. Gas and electric bills often fluctuate from month to month, but if they normally run between $175 and $225, set aside $225 in your budget. With six people using the utilities, discussing the importance of turning off lights and water when not in use can lead to dramatic savings.
Set aside approximately 10 to 15 percent of your income for food. Take care not to underestimate food costs; four growing kids need adequate nutrition. This category includes restaurants and coffee runs in addition to grocery trips, so plan to eat at home most of the time and save the dinners out for special occasions.
Allocate 10 percent of your income to transportation costs including gas, oil changes, car repairs, insurance, license, registration and taxes. If you have kids at or near driving age, talk about the importance of safe driving and how it results in lower fuel consumption and insurance costs.
Account for 10 to 15 percent of your spending to go to charitable giving including donations to your church, non-profit organizations and educational foundations.
Plan on spending 2 to 7 percent of your income on clothing since you have growing children in your household.
Budget 5 to 10 percent of your income for medical expenses including health insurance, prescriptions and co-pays for office visits.
Set aside 5 to 10 percent of your income for recreation and entertainment expenses. This could include your cable bill, a vacation or a new video game system for the kids. Discuss the importance of staying within the budget in this category, as six people overspending can put a real hurt on your budget.
Plan on spending 5 to 10 percent of your income to pay down your consumer debt including car payments, credit cards and student loans. If you have a mortgage, don’t include it in this category because you covered it in your housing expenses.
Modify your budget as necessary until your expenses subtracted from your income equals zero.
Tips
Consult your written budget each week to assess the state of your spending. A zero-based budget requires every dollar to have a name. If your utility bills came in under budget, you will need to assign the leftover money to another category. Likewise, if your car broke down and the repairs cost more than you had budgeted in the transportation category, you need to take that amount from another category.
If your expenses in any one area are disproportionate to the others, it can give you a clue to your household’s spending weaknesses. Work on cutting expenses in that category.
Warnings
If you don’t have enough money to cover all your bills and debts on paper, you don’t have enough to pay it all in real life. You have two options: you can either spend less or make more. Consider getting a part-time job to help make ends meet or cut spending in less important categories, such as entertainment.
