What Are the Keys to Budgeting for a Family of 5?
How can I budget for a family of five? Budgeting for a family of five starts with knowing your income and tracking your expenses. Next, you need to create a plan that supports your priorities without feeling restrictive.
A practical method for budgeting for your family is the 50/30/20 rule:
- 50% of income for needs (housing, food, utilities)
- 30% for wants (fun, trips, extras)
- 20% for savings and debt repayment (or investing if you’re debt-free)
Housing costs vary, so you may need to adjust these percentages if you live in an area with high rent or if you have a high mortgage relative to your income.
But no matter what, you should always keep a “wants” category so you and your spouse, and your kids can take fun excursions and enjoy life. Also, it’s key to plan ahead for irregular expenses (holidays, medical costs) by setting aside money monthly, and building an emergency fund of 3–6 months of living expenses.
I recommend that you also include your children in the process. Have family budget meetings and let them track their allowance or savings.
Keep reading for my budgeting philosophy and more tips on how to manage your family budget.
Written By Tiffany Woodfield, Financial Coach, TEP®, CRPC®, CIM®
Before we go deep on how to budget for a family of five, I’d like to share my approach to budgeting.
As a financial advisor and coach, I’ve noticed that there are some misconceptions about budgeting.
How I Approach Budgeting
Budgeting has a bad rap! Why? Because, in many cases, budgeting feels so restrictive that people “fall off the wagon.”
But budgeting shouldn’t feel restrictive. Budgeting is about learning how to feel empowered when you spend. I achieve this by setting aside money for the things that I really want instead of just impulse spending. When I budget for something that I want, it feels great when I buy it!
Growing up, my mom was always someone who couldn’t resist a sale.
But I started to notice that this can be a trap. My mom would always focus on how much she was saving rather than if she really wanted the item.
Her closet would be full of things that were a “great deal” but weren’t things she loved. So what was the result? She felt guilty about her purchases because they weren’t really things that she wanted. I followed this pattern when I was younger, spending mindlessly, and then feeling guilty.
But then I learned about budgeting. And it really did change things!
Creating a budget made me realize I could spend on something I loved and not feel guilty. If it meant I had to wait because the item cost more than I had, then I would wait.
The feeling I had when I got the item was pure joy because I knew two things: I loved it and had set aside money for it!
Now, how can you apply this to your family life and budgeting for your family of five?
How to Budget for a Family of Five So It Doesn’t Feel Restrictive
First, it’s crucial to identify what you want to do with your family, but that may feel out of reach financially.
Instead of saying, “We can’t do that,” you might say, “How can we do that?” If you want to take the family on a big trip but don’t have the money for it right now, figure out the cost and how long it will take to save for it. You don’t have to forgo doing fun things if you budget for them well in advance.
In addition, using the 50-30-20 rule is brilliant when you’re budgeting for a family.
I’ve written a whole blog post about the 50-30-20 rule. But the key here is to spend 50% of your household income on needs, 30% on wants, and 20% on saving and debt repayment. If you already have a fully funded emergency fund and are debt-free, then 20% will go towards investing.
In some cases, you may need to change the percentages. If you live in a place where rent or mortgages are high, you may need to spend 35% or even 40% of your income on “Needs.”
Just make sure that you place your family’s values and priorities at the top of your mind when creating your budget.
And ALWAYS include a bucket for “Wants,” i.e. discretionary spending. Make sure you spend a little something on yourself each month so that you can nurture yourself and your family.
50/30/20 Budget Calculator
What's the best way to allocate funds for savings and investments?
For a family of 5, creating a budget and tracking your spending is essential.
To Start:
- Look at the money you have coming in each month.
- Review your monthly expenses and categorize them into fixed and variable expenses.
- Determine how much money you have left over each month.
- Apply one of the popular budgeting techniques, such as the 50/30/20 method of budgeting. This method allows you to put 50 % of your income towards needs, 30% towards wants, and 20% towards savings and repayment of debt. When you use the 50/30/20 rule, you’ll use 20% of your income towards saving and investing.
- Review and assess your budget frequently. You may want to consider setting up a day once per week that you review your budget to ensure that you’re on track.
How much should a family of five budget for groceries each month?
Recent research shows that the average single adult spends about $350 per month on groceries.
With a family of five, this would be around $1,750. Every family situation is different, so to get the most accurate picture, track how much you spend on groceries over a few months.
According to Canada’s Food Price Report 2025, the average family of four is expected to spend $16,833.67 per year on food. That amounts to roughly $1,403 per month, or about $350 per person per month.
If your children are young, the expenditure will likely be lower.
So, for a family of five, it would be wise to budget at least $1,750 per month for groceries. Budget more if you have hungry teens and budget less if you have very young children.
If this is too much for your family, here are some ways to cut costs that you could consider:
- Substitute lower-cost proteins like beans and lentils for some meals.
- Buy from places like Costco, as bulk purchases save money over the course of a year. In particular, buy your protein from Costco, as this will add up.
- Make a meal plan so you don’t have any food waste.
- Cook “everything” meals where you use up all the random things in the fridge so it doesn’t go to waste.
- Eat plenty of fruits and vegetables as they’ll give you plenty of nutrition, i.e., bang for your buck!
- Switch to water instead of juices, sodas, etc., as this can provide a significant cost saving in the long term.
- Eat delicious but low-cost carbs like rice for lunch or dinner.
Source: Canada’s Food Price Index 2025
How do we plan for irregular expenses, like holidays or medical emergencies?
When creating a budget, you’ll want a buffer of three to six months of living expenses in an emergency fund.
To budget for holidays, get started at the beginning of the year. In January, determine your holiday goal and then research the costs.
Setting aside monthly money means you are more likely to take the trip and won’t have to use credit to finance it!
How can we include our children in the budgeting process?
Including children in the budgeting process is an excellent learning opportunity, and you can start this when your kids are still young.
Imagine how helpful it would have been if your parents had done this with you!
Once you have created the foundation for your budget and understand how much money comes in and goes out each month, have a family meeting. Share what you have learned and explain why you are budgeting.
Creating a positive money mindset early on leads to financial success in the future.
For example, you can say, “We are making a budget so we can know where our money goes and choose to spend on doing the things we enjoy. Having a budget helps us to feel empowered and confident in making decisions around money.”
This creates a good starting point to discuss budgeting and money with your kids. But, if your kids are into it, you can also create rewards and make it fun to have them track what they have spent their allowance on.
Give rewards for saving AND for tracking their spending. Why? Because spending on the right things teaches abundance!
Quick Video: 5 Basic Elements of a Budget that Everyone Needs to Know
These five elements of a budget are critical to consider when you're creating a financial plan that helps you build towards a work-optional lifestyle and financial freedom.
How often should we review and adjust our family budget?
In the beginning, you need to review your family budget every month.
Once you notice your estimates aren’t changing as much, you can start to review every three months. Keep in mind that in the first year, there are more “flexible” expenses you may not have considered until you have done this process for an entire year, so keep an eye on it.
What are some common mistakes families make in budgeting?
The most common mistakes families make when budgeting are as follows:
- Not having everyone on the same page.
- Not sticking to the budget.
- Forgetting to review the budget.
- Shaming yourself or others. Remember, change takes time!
- Not appreciating the importance of creating a positive money mindset.
- Not seeing that budgeting is an opportunity and not something you do simply because you don’t have enough.
A family can avoid these mistakes by creating a routine where it is on the calendar and every month you review your budget.
Frequently Asked Questions About Budgeting for a Family of Five
To “survive” means covering your basic needs without extras. In many Canadian cities, a family of five needs at least $5,000–$6,500 per month after tax just to cover the basics. In higher-cost areas like Vancouver or Toronto, you may need closer to $7,500–$8,500 per month to meet essential expenses. The important thing is to build your budget around your reality, not the averages. Start by tracking your expenses for three months to get a clear picture.
A good starting point is the 50/30/20 rule. Families of five usually spend about $1,750 per month on groceries, with 50% of income going to needs, 30% to wants, and 20% to savings or investing. The average budget will depend on where you live.
It’s wise to keep an emergency fund of 3–6 months of expenses ($15,000–$30,000 for most families), plus savings for future goals like holidays, education, and retirement. However, this number depends on where you live, your expenses, and how risk averse you are. Some families like to keep a full year of living expenses saved in the bank. What you choose to save depends on your personal situation.
Final Thoughts about Budgeting for Your Family
People often moan and groan about budgeting.
But as the head of your family, you know that budgeting isn't optional.
The most important thing to do when budgeting for a family of five is to use an easy method like the 50-30-20 rule which is based on percentages. If you spend 50% on needs, 30% on wants, and save or invest the final 20%, you'll be living below your moneys and saving for the future.
Another critical element is to ensure you have an emergency cushion saved up for unexpected expenses. Nothing messes up a budget more than a big, one-off, surprise expense.
Finally, make sure your budget doesn't feel restrictive. If you don't spend any money on fun, then you may "fall off the wagon" and spend money randomly on things that don't even matter to you or your family.
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About the Author
TIFFANY WOODFIELD is a financial coach, cross-border expert, and the co-founder of SWAN Wealth based out of Kelowna, BC. As a TEP and associate portfolio manager, Tiffany has extensive experience working with successful professionals who want to leave a legacy and enjoy an adventurous, work-optional lifestyle. Tiffany combines extensive knowledge from her background as a financial professional with coaching and her passion for personal development to help her clients create a unique path that allows them to live their fullest potential. Tiffany has been a regular contributor to Bloomberg TV and has been interviewed by national and international publications, including the Globe and Mail and Barron’s.