It is often said that life changes when you have a family to raise and there are many ways in which this could be true. When it comes to finances, you can always expect to pay more once children come along. It's important to take a look at the basic, minimal budget needed for the average family of four.
Understand Cost of Living
The cost of living can vary from year to year, typically going up. The U.S. Department of Health and Human Services establishes the current year's poverty level for a family of four. In 2010, this figure was set at $22,050. This is a national average and some areas have a higher cost of living than others. Usually compensation for jobs in the area will be somewhat aligned with the cost of living but not always. This can affect the typical budget for a family of four.
Housing expenses are commonly a top priority for a family of four. This is because they will need a stable place to live and a house big enough for all four people. The age and gender of the children can play a role in how many rooms a family needs and the size of the house will affect the pricing. Housing expenses are usually much higher in urban areas but this often balances out where transportation is cheaper and other expenses may be lower. However, rent or mortgage outside of a city area is typically cheaper, allowing the family to save on their housing budget. The average family is usually advised to spend about 32.9% of their income on housing, although many families go over this budget for mortgage or rent alone.
The budget for a family of four should also include transportation expenses. This might include the cost of buying a vehicle as well as related costs such as taxes, title, registration, insurance and maintenance. It could also include the lease of a vehicle or tolls for public transportation. To save more in this area, it benefits the family to live closer to where parents go to work and children go to school. Buying a vehicle that has better gas mileage or investing in an eco friendly vehicle can save the family of four more in the long run. A family with only two children can get by with a compact car or sedan and save money whereas larger families would need a van or other 6+ passenger vehicle.
The Boston Regional Challenge presented a report about the cost of transportation and housing and also has a calculator for determining costs. This report shows that some families are paying as much as $12,000 a year in transportation costs alone.
Utilities will be higher for a family of four than for a single person or a couple without children. More people using electricity and water in the home means higher bills. The size of the home will also affect the cost of utilities. Families can stay on budget and keep costs down by learning how to conserve and unplugging appliances that are not in use.
A family of four will also need to budget for child care. If the children are in school, child care may only be needed after or before school and during the summers. If the children are not of school age yet, all-day child care expenses can be high. The U.S. Department of Labor in 2010 reported that on average, a family of four can expect to pay a low of $611 per month for full time care for one child only and a high of $300 per week for one child. Cities like San Antonio, TX, and Jackson, MS, have the lowest average prices in the country of around $350-$400 a month per child in full time care.
Food and Drink
Food for a family of four must also be factored into a budget. More mouths to feed is automatically more money. Families can help reduce costs by planning meals ahead of time, buying locally and buying in bulk when it applies to get a discounted rate. The US Department of Agriculture calculates national average food costs for families. In 2010 the department estimated that the typical family of four spends between $771.10 and $1,113.80 per month on food.
Calculate Your Cost of Living
If you are moving to a new city or state, adding new family members to your household or making other changes to your lifestyle and budget, you can benefit from using a cost of living calculator to determine what your expenses will be on average. Bankrate's "Cost of Living Comparison Calculator" can help you to compare the cost of food, housing, travel, utilities and more for different areas. You can even compare how your expenses will change if you are moving your family from one city to another or use it to see if your current budget falls in line with the average family of four in your area.
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