Family Expenses
The average family expenses include the expenses that families cannot avoid: utility bills, medical bills, cell phone bills, rent, tuitions, insurance… the list can go on and on based on what stage of life your family is in. Your family expenses go hand in hand with your family income and your family budget. In essence:
Family Income – Family Expenses = Family Budget
In this equation, the family budget is your budget after all the bills have been paid, whereas most family budget calculators include those expenses in the calculations. However way you want to play it though, these three factors of family finances balance each other and cannot work without one another.
The hard part is figuring out how many family expenses you have, and what they are. Do your family expenses change monthly? Do you have more in certain months? Will you consider presents for birthdays and Christmas as a family expense? Making a family expenses list can give your family a visual that helps answer all those questions.
Family Expenses List
A family expenses list should have the following components:
- Family Income (income, investments, savings)
- Housing Expenses (rent, utilities, gas, maintenance, home improvement)
- Transportation Costs (payments, public transit, gas, insurance)
- Family Care (prescriptions, doctor/hospital visits, health insurance, health clubs)
- Living Expenses (groceries, clothing, education expenses)
- Family Entertainment (movies, liquor, celebrations, vacations)
- Obligations (credit card payments, loan payments)
- Savings (401k contributions, general, college savings)
A great example of a family expenses list can be found at www.webreader.com.
Fixed Family Expenses vs. Variable
Although the fixed family expenses are just that, fixed, you should still keep an eye on them to take notice on how much of your overall family income is going towards different expenses. Financial experts recommend that certain family expenses should be only certain percentages of your overall budget. For example, housing costs should be no more than 25% of your income.
Other than the typical fixed family expenses are the futuristic expenses. I’m not talking about buying a vintage light saber, but savings for children’s college tuition, retirement, or regular savings for a regular say should all be labeled “fixed”. Feel free to add the futuristic term to spice up your family expenses list. These are considered fixed expenses because it is recommended putting away the same amount (or the same percentage of your total earnings) into savings each month. This is a fixed number that doesn’t change; therefore it goes under the fixed family expenses category.
Now, variable family expenses are harder to track. These include the family entertainment and living expenses: eating out, groceries, going to the movies, shelling out money for a birthday party. Because these are hard to track, the best way of budgeting these expenses is to save receipts, keep a record of what your spending on where and when, and then average 2-3 months worth of variable expenses to create an average. This average should go into your family budget.
