Example of Family Budget: Our Real-Life Budgets Across Different Family Stages

If you’re wondering whether you can grow your family without giving up financial independence, you’re asking the same question I did before we had our third child. I felt like every new child set us back — until I ran the real numbers.

In this post, I’ll walk you through real budgets from our family over several years and life stages. My hope is to encourage you not to let the financial side of the equation become the deciding factor if your heart is telling you otherwise.

I’ll share our example of family budget using real numbers and show how our spending changed as we recently grew from four to five people. With our baby about to turn one, I can look back and see how much our costs really changed—and the answer surprised me.

Example of Family Budget: Why I’m Sharing Our Real Numbers

I feel like there are far too few real-life budgets from real families out there. Especially from those having multiple children who live in the city or nearby.

I’ve always been curious about the real numbers behind the stories and advice on living on one income as a growing family, so the second income can be saved and invested, and thought “Yeah, these are nice tips, but tell me your numbers, so I get the idea”. So, here we go with our example of family budget.

Our Household Income at a Glance

Our reliable monthly one-income budget for a family of five averaged a net household income of 5,700 — and, to put that into context for this example of family budget, this figure excludes any irregular payments. That’s slightly higher than last year, thanks to Marc’s salary increase, a small amount of parental allowance I received, and child benefits. I went back to work a month ago, so my salary isn’t included in the total number yet.

Marc’s monthly net income varies slightly from month to month, so I’m using the lowest amount he has received when planning our budget.

We don’t include irregular income in our budget. Instead, any extra money Marc receives, along with one-time payments such as bonuses or tax refunds, goes directly into investments that help us move closer to our family’s goal of semi-retirement.

Example of Family Budget: 3 Stages, Real Numbers

To give you our real-life example of family budget, you need to know our budgeting structure.

We have a total of 10 budget categories as you can see in the table below—actually 11 if you include the “Invest” category, but that one is not part of our regular budget because it is fully funded by my salary and any extra income.

However, I’m currently in the process of greatly simplifying our budget categories. So, stay tuned as I’ll share our new minimal budget once we have it in place.

Example of Family Budget #1: Family of 4 (Two Toddlers)

The oldest budget below dates back to when we were still a family of four with two toddlers.

Example of Family Budget #2: Family of 5 (With a Newborn)

For comparison, the second budget shows our growing family finances shortly after our newborn arrived.

Example of Family Budget #3: Family of 5 (Preschooler, Toddler, and Baby)

The latest budget reflects our average spending as a family of 5 — one preschooler, one toddler, and one baby older than six months, based on data from last winter until this summer.

If you’re wondering why our healthcare costs are so low in this example of family budget for a family of five, it’s because we enjoy Germany’s statutory health insurance system. We also live fairly simply: we drive one small older car, buy most of our family’s clothing second-hand, and only pay for the insurances we truly need at this stage of life—just to give a little more context behind some of the numbers above.

What the Cost of Having a Third Child Actually Looked Like

Groceries Increased More Than Any Other Category

Our grocery bill did not simply increase because of one additional child—since I am breastfeeding and the portions a baby eats are tiny. Food costs grew to around 1,000 mostly due to going 100% organic, and buying the food directly from farmers nearby. That was an intentional decision rooted in growing our family.

Child-Related Costs Shifted

Since last winter we only paid once for daycare for our baby: in May. I split the cost throughout the months which results in only a slight increase in this budget category. She goes to the same daycare as her older sibling for 1–2 hours per day currently, but we’re about to raise it to 4 hours a day. That’s possible because Marc is on parental leave right now, and we want to give her a smooth start. When he returns to work, we plan to stick to 4 hours a day as he brings the kids in the morning and I’m working until noon.

Transportation Costs Actually Went Down

Our costs for transportation usually go down during spring and summer because we’re driving less by car and prefer walking or e-biking in our small town, especially Marc. For instance, he usually drives the kids by bike to daycare and our oldest already bikes by herself.

Housing Costs Barely Changed

We have no need for a larger house, even if some may consider our house, and especially the garden, quite small. Our plot is less than 300 m² (0.07 acres) in size, and our living area is just under 140 m² (1,500 sq ft). The house still feels almost too big (we have 4 bedrooms), as the kids share one room, where they actually only sleep — and one of them always wanders into our bed during the night, and the baby sleeps in our bedroom while I’m still breastfeeding.

What Surprised Me Most About Our Family of 5 Budget

I literally expected costs to explode. They did go up, but not nearly as much as I feared. And yes, they will rise again. Our oldest is starting private school, and our youngest only started daycare last month, so I’ve been spreading one month of costs over several months. But I feel like we will adapt. We still have a positive gap of almost 300 compared to our income, and more importantly, I know exactly where we have financial room—groceries being the biggest one—even if using that room comes at a cost.

I already know from over a decade of budgeting and growing our family that lifestyle choices matter more than family size. We genuinely resist upgrade culture and find ourselves enjoying, and even craving, a simple life. But that’s another topic in itself.

You see, there’s nothing to fear if you can control your money instead of your money controlling you.

That needs quite some discipline in the form of budgeting, tracking expenses, and actually reviewing spending—something I’m totally guilty of doing far too rarely.

But the tracking and budgeting part already feels like second nature. Without that, I’m pretty sure I would seriously question whether we can afford another child.

The Biggest Lesson We Learned About Family Finances

Looking back at our example of family budget across three stages, the biggest lesson wasn’t about the cost of having a third child or whether we could afford one. It was realizing how much flexibility a budget can create.

Budgeting is a tool, not a restriction — and it all comes down to intentional spending.

I think many people get that wrong and just want to spend their money without thinking so much about it or even questioning it. And, I get it. I did that too. For most of my adult life.

But it just didn’t work for me anymore. Although Marc and I had above-average salaries, we had far too few savings compared to that. And that ultimately limited us because it made us so dependent on our paycheck. You can read more about us here.

Can You Afford Another Child?

Yes, numbers matter. And I know that the cost of having a third child (including daycare and healthcare) is far higher in many countries like America than in Germany. But don’t assume another child will double your expenses.

Looking at your actual monthly budget for a family, line by line, may reveal more flexibility than you think. In our example of family budget, we could simply choose to spend less on groceries or fun money, and our total would barely change, even after adding a third child.

Use our free Simple Budget Calculator to find out exactly where your money goes, and where you have more room for adjustments than you realize.

Related Budget Resources

If this example of family budget resonated with you, we offer a free Simple Budget Calculator so you can see exactly where your money goes, where you have more room than you realize, and consider adjustments when needed.

If you’re an absolute beginner and need help getting started with budgeting and tracking, I recommend The Budget Mom, who helped me when I started to take budgeting seriously. Also, here are some related posts from the blog:

• Start Your Family Budget in 7 Steps
• The Values Based Budget? A Complete Family Guide
• A Line-by-Line Budget
• Save More in Every Category With a Line-by-Line Budget
• The Fixed And Variable Expenses Worksheet For Budgeting

I’ve previously shared our New 5K Family Budget Plan after our newborn arrived (almost a year ago now, which is crazy to me because time passes so fast) as well as our full Monthly Budget Breakdown as a Family of 5.

Curious about your own path to financial independence? Start with our “Financial Freedom Pathfinder” to compare different Semi-FI paths side by side — and find the one that fits your family life.