Mapping out your family’s spending is one of the most powerful ways to bring order to the chaos. Think of it as your financial roadmap—a clear picture of how your money flows. Whether you’re trying to save for a dream vacation or pay off debt, a solid conscious spending plan can guide every family financial decision.
I’m not saying to set a hard budget for your family. Most people struggle to manage their own individual finances, let alone their families’, and the reason this struggle exists is because budgets feel restrictive and usually offer little room to work around. There’s also a negative association with budgets as they put an artificial cap on how much you should spend, making people even less likely to follow through with them.
A Conscious Spending Plan for your family will let you manage your family’s finances proactively with room for guilt-free spending as well. To get started, list all your sources of income, from paychecks to side hustles. Then, categorize your fixed costs — everything from household expenses to groceries and transportation. This should be about 50-60% of your family’s total take home pay.
Next, be sure to allocate funds for savings and debt repayment. This can be around 10-20% of your family’s total income. Savings are anything your family is saving for, like new furniture for the house or perhaps for your next family vacation.
Another 10-20% should be set aside for long term investments. This is usually the retirement savings for the working adults in the household. If there’s money leftover, you can also set aside a small amount for younger children to give them a head start, or for the elders living in your home who may already be retired.
Lastly, 10-20% of your income should be allocated for guilt-free spending. This can be for your family’s entertainment, like going out for movies or treating yourselves to a nice meal. Every household is different, so spend this money guilt-free on whatever it is that makes all of you in your home happy.
Notice that I provided ranges for you to work around with, which is the beauty of the Conscious Spending Plan. You’re not tied down to a restrictive percentage every month, and you’re more than welcome to tweak those ranges depending on the size and current expenditure of your family. For easy tracking, use a tool like YNAB, or if you’re looking for a ready-made solution, try out my Conscious Spending Plan template, which you can easily adjust to fit your family’s needs.
What’s truly eye-opening is my conversation with Lucas and Trin and how they justify overspending on food, simply because it’s seen as a “basic necessity.” This is a mindset that many families fall into—thinking certain categories are untouchable when it comes to cutting expenses.
However, the reality is that even “necessities” can and should be optimized within a family’s conscious spending plan if there’s a need for it. Food may be essential, but without setting realistic targets, it’s easy for costs to spiral out of control. Creating a Conscious Spending Plan for your family will force you to take a hard look at where your money is actually going.
, Ramit Sethi