We spend close to $8,000 each month as a family of four, which feels like a lot. Here’s how we’re addressing our family expenses.

One day, I found myself looking for solutions. I searched online for a reasonable annual budget for a family of four and clicked through several results.

I realized I needed a benchmark to measure our spending habits. Tracking via YouNeedABudget (YNAB), I found we were spending over $7,500 a month, but didn’t know if that was typical.

I wondered how our costs had risen so significantly from last year’s $7,000 monthly average. Was it due to our fondness for gourmet cheese? Or perhaps the sports camps I enrolled my son in? What I discovered was eye-opening.

Finding Solutions for Our Budget

I uncovered that food, gas, and travel were major drains on our finances. Rising prices affected everything, including utilities, and we had eased our spending limits post-pandemic. Visiting friends and buying plane tickets added significantly to our total yearly expenditures.

It was clear I needed to take action quickly. For others facing similar challenges, here are some strategies we've implemented to better manage our budget.

Tracking Expenses is Essential

The only reason I knew we were on track to overspend by $10,000 this year was my diligent expense tracking since 2017. This insight allowed me to identify when to cut back and whether we were overspending just to keep up with others.

Whenever our budget expands, I review our categories against previous years. There are many apps for expense tracking, but YouNeedABudget (YNAB) is a popular choice. If we exceed our monthly budget, I limit our spending for the remainder of the month (no more unnecessary purchases for us!).

A personal finance expert highlights that “budget” means both your spending plan and your actual spending record. Tracking spending monthly gives a clearer picture of financial realities, leading to manageable changes.

Focus on Major Expense Categories

The Economic Policy Institute (EPI) provides a budget breakdown for a family of four in U.S. metropolitan areas. I entered our area and got some eye-opening numbers.

In contrast to other families, we spend less on healthcare and transportation, but those savings vanish due to high food and housing costs. Since we’re not moving, our primary target for savings is food.

We've switched to a more affordable grocery store and now primarily shop at Aldi. I also believe we’re saving on healthcare by including more fresh fruits and vegetables in our meals. According to EPI, the average annual budget for a family of four in our area is about $89,000 (including taxes). We spend approximately $95,000 annually, indicating we have room to tighten our budget.

Evaluate Subscriptions and Recurring Costs

Upon reviewing our subscriptions, we found they were costing us dearly. We narrowed it down to one Patreon for each of us and retained only our three favorite streaming services (Netflix, HBO, and a .99/month Hulu deal from Black Friday).

The expert advises cutting discretionary funds first. You can’t avoid utility bills, but you can reduce costs on cable, streaming, or dining out. Once you identify what to cut, follow through but remain intentional with the savings.

I compared insurance rates but didn’t find a better offer, so we kept those. However, we eliminated several auto-pay subscriptions. I also realized that our increased spending on Amazon was mainly for our puppy’s pricey treats. We switched to affordable peanut butter Kongs, which are reusable and should keep our dog just as happy.

Prioritize Important Budget Items

Like many families, we held back on travel during 2020. However, we were eager to visit family again in 2021. After a few trips, our usual $5,000 budget for travel was quickly surpassed. With our children growing up, traveling is a priority for us. Determine what matters most in your life, and don’t hesitate to invest a bit more in those areas, adjusting other expenses accordingly.

Maintain Regular Budget Check-ins

If you haven’t used apps like YouNeedABudget (YNAB) or Empower for tracking your spending, you could be missing out. Ultimately, you need a budgeting method that fits your lifestyle to make it a habit. The key is to make it work for you.

I prefer a more traditional method, tracking expenses as they occur and adjusting my plan thereafter. It’s become something I genuinely enjoy.