Our Actual 5K Monthly Budget Breakdown For Our Family Of 5

Today we share our actual monthly budget breakdown and exactly how we allocate our money. See how our one-income family of 5 thrives on a €5,000 monthly budget so we can invest the second income to grow our wealth. I will share why we chose this seemingly restrictive, yet so effective budget for a family of 5 that allows us to do so many great things with our savings (like contributing to our early semi retirement fund).

Is A €5.000 Monthly Budget For A Family Of 5 Considered Frugal?

It depends on where you live and your social environment. In our case (near the most expensive city in our country – see details below), the poverty line for a comparable family of 5 is €3.600 to €3.700 per month (although it’s actually higher, as explained below). That is the amount such a frugally living family would receive in state benefits, at least under certain circumstances, such as unemployment.

In addition, this family would receive some more child benefits of approximately €400 to €730 and several other benefits. Examples include reduced or free public transport tickets, discounts on park admissions, access to food stamps, one-time reimbursements due to defective appliances, free daycare and lunch (up to age 15), paid school supplies and trips, reimbursement for tutoring. So, if childcare and lunch are paid for 3 kids, these additional benefits amount to approximately €600, according to experts.

Overall, a family of 5 with three kids (under 15) has to survive on between €4.600 and €5.030 in state benefits at the lowest income level and practice frugal living (if living in the same, most expensive area of ​​the country, as we do). Therefore, we consider our monthly budget of €5.000 to be frugal.

The point is: frugal living is our choice. We aren’t forced to live frugally, and we’re very grateful for that. We can decide which daycare we choose for our kids, what food we buy, what appliances we purchase, and so on. When you’re on welfare, that’s simply not the case; others make these decisions for you, and you take what you get. That’s a fundamental difference, as you’re dependent on other people’s money.

However, frugal living is still very subjective. Essentially, it boils down to one thing: You have a fixed amount of money (which is at the lower income level) and stick to it. When the money is gone, it’s gone. But it gets tricky when the money isn’t gone at all, because you actually have more money to spend.

How To Become A One-Income Family (When You Earn A Second Income)

Technically, we are not a one-income family (as I earn a second income). But we only live off Marc’s income from his corporate job, the bonuses he earns throughout the year, the tax refunds we receive, and the state benefits for our kids (which almost every family gets in Germany, where we live). More details below in our full monthly budget breakdown.

We’ve seen some really awesome financial successes along the way from this way of thoughtfully and intentionally budgeting our money and carefully planning out our finances. This gives us so much peace of mind to know firsthand that we can actually live really well on one income. And, in a lot of ways, in this area of our life, we felt the most unified in our marriage. We like to continually review and adjust our monthly budget breakdown and discuss successes and hurdles along the way.

Becoming a one-income family – even if we earn a second income – has given us the freedom to decide what to do with our second income. For us, that is investing for passive income (using the 15 easiest strategies for success) so we can make our family’s dream of early semi retirement a reality for our family within around 10 years. Now that we’re halfway there, we can share a few things from our experience in the hope of inspiring you.

When you decide to become a one-income family (even if you earn a second income), you need a strong why behind not spending this second income. Because it can be very tempting to do so, and I can understand that very well. We talk about our why for saving that second income on our About US page.

About Our Family & Financial Situation

Our family lives in Germany, nearby one of the most expensive cities (even in Europe). We live in a 130 m² semi-detached house with a relatively small garden, where we nevertheless grow as much of our own food as possible. Out of conviction and with great joy, we practice frugal family living and regularly review our monthly budget breakdown to ensure that we achieve our financial goals.

We, that’s Marc and I, our 2 toddlers (both 5 years and younger) and 1 baby (due in a few weeks). I’m already referring to a family of 5 budget (although we’re now four), for two reasons.

First, we already have baby expenses, such as building up our baby savings fund (more in a second). Not to mention, our grocery bill that is significantly higher now that I’m pregnant because I’m eating a lot more than usual. This will continue for the time being through breastfeeding and beyond, once our baby joins us at the family table.

With our baby savings fund, we save money every month for expenses that will arise in the near future due to pregnancy, birth, and postpartum, as well as the baby’s first year. We know all of this because we’ve been tracking our budget for the past 10 years and more. So, we can confidently say that this will remain our budget for our baby’s first year.

And that brings us to the second reason why I’m already talking about a family of 5 budget. We’ve already created our budget for the remainder of 2025 and the following years! This was only possible because our spending history showed us exactly what costs will be incurred and when, once we have a new family member. So we know how to budget for a family that is growing.

We will never exceed our €5.000 monthly budget (unless inflation strikes again or something else unexpected happens). However, if our monthly budget breakdown showed significant increases, we would adjust our budget through frugal living, as we truly enjoy and value a frugal lifestyle.

It allows us to remain a one-income family even if we earn a second income. And this enables us to achieve our ambitious financial goals, such as saving money to invest money for our family’s dream of early semi retirement. If you want to learn more I recommend you Start Here.

We are also using my second income to aggressively pay off our mortgage over the next few years so that we can enjoy debt-free living in early semi retirement. We don’t have to do this to become debt-free in the future, but we want to. That’s because one of our big priorities in our marriage is not only owning a house (we want to rent out at some point in time) but also debt-free living – as soon as possible.

About Your Family & Financial Situation

Every situation is unique. Depending on where you live, how big your family is, if you have further dependents (you support financially), donate regularly like tithing (donating one-tenth of the income to a church or religious organization) or pay off (consumer) debt – it’s going to affect your budget and how your personal monthly budget breakdown looks like.

So please, don’t look at our family of 5 budget thinking that’s where your (one-income family) budget should be. We don’t want you to feel like you have to adjust your budget to ours to keep you within a €5.000 monthly budget. Your ideal number could be 2.500, or 4.000, or even 7.000 – it totally depends on your family’s unique situation.

My hope is that by revealing our real family budget, I can encourage you to analyze your situation. Then, create a budget plan that reflects your family’s needs and values, ​​and works really well for your family. That’s how you put your money where your values ​​lie, rather than just spending it without keeping track of it and constantly reevaluating. Because that will make the biggest difference in your budget planning and financial success. That is called a values-based budget (the ultimate budget for FIRE – Financial Independence Retire Early or any early semi-retirement plan).

Our Full €5.000 Monthly Budget Breakdown

Perhaps some questions have arisen while reading. I’ll try to explain some details:

• What about an emergency fund? We have already set up our emergency fund.
• What about long-term savings for kids? For our kids’ savings plans, we use gifts from our families, invest them, and regularly check whether we are on track to achieve our savings goals for them.
• What about long-term savings for us? We use my second income to save for our early retirement plans. If that weren’t possible, we’d wait until some of our debt was paid off and then start saving for traditional retirement (which would be perfectly timed).
• The monthly budget of €5.000 is actually a budget of €5.120. Our budget fluctuates slightly from month to month, as yours might too. Unless there are unexpected expenses, we stick to €5.000, as this covers our family’s entire living expenses. Should unexpected expenses arise, we have a buffer of €130.

In this post, I won’t go into detail about our different budget categories and their family spending habits. However, I will do so in more detail in the next blog post, so you can see why and how we live frugally in each of the budget categories.

How to Create Your One-Income Family Budget? FREE Calculator

We offer a FREE family budget template you can get by clicking on the picture or link down below. This is designed as a so-called “Simple Bare Bones Budget Calculator“. It is easy-to-use and especially designed to help you to live a family life you love on a budget you can afford, so you can achieve the financial goals that are important to you. I personally love the pie chart showing the distribution of your money across all your budget categories. To me, that was eye-opening, and it will be for you too.

How to budget for a family of 5 (or whatever size your family may be) if you want to create your own one-income family budget? It’s so important to just get started. You don’t have to write down your entire budget right away or know and be able to track all of your expenses. Take the time to learn how to do this, and then the ball will start rolling. I provide some blog posts to help you out if you’re a budgeting beginner or just need some help with how to create a family budget successfully (one of those explains exactly how to use our FREE Calculator, as mentioned):

• How To Start A Family Budget That Really Works In 7 Easy Steps
• How I Spend My Money On What Matters Most & Skip The Rest
• How To Create Your First Bare Bones Budget: FREE Calculator
• FREE Fixed And Variable Expenses Worksheet For Budgeting
• 10 Steps To Master Budgeting As A Couple

I hope our honest monthly budget breakdown gave you a new perspective on how to budget for a family of 5 (or any other size) consciously using frugal living, so you can afford everything you want for your family. By revealing our monthly budget breakdown, I wanted to show you that through intentional budgeting, you can achieve your financial goals (whatever they may be) faster than you thought possible.

In the next post, I will go into detail about our different budget categories and spending habits, so you can see why and how we live frugally in each of the budget categories.

I’d love to continue helping you on your financial journey. To make sure you don’t miss any future resources, tips, or personal insights, join the community via the green footer below.