It probably happens occasionally—days after you receive your paycheck, you start wondering where all your money went.
The good news is you’re not alone. The bad news? It shows you’re not paying attention to how you spend your money.
For people who have mouths to feed, budgeting is a must. It’s an important part of running an efficient household.
However, budgeting isn’t exactly music to one’s ears. For busy people, it may feel like a burden, an additional step before they can spend their money. For those running on limited resources, it may seem unnecessary.
But if you want to improve your family’s finances and ultimately make life comfortable for everyone, don’t skip budgeting.
In this article, you’ll learn how to effectively manage your home’s finances. We’ve also included a sample family budget in the Philippines that you can use as a template.
How Much Should a Filipino Family Have to Live Decently?
Before learning how to budget, you need to get an overall picture of the family living wage in the Philippines. This is how much a Filipino family needs to survive and live decently.
According to the Philippine Statistics Authority (PSA), the average annual family income in 2021 is estimated at ₱307,190 or around ₱25,500 per month. But is it enough for a family to survive?
IBON Foundation’s calculations say yes. According to the local think tank, a family of five in the National Capital Region needs ₱1,065 a day or ₱25,091 per month in order to live decently. Note that the foundation’s computations are also based on the data from the PSA and the National Wages and Productivity Commission (NWPC).
But things have changed this year. The inflation rate is rising, rendering commodities expensive and weakening a family’s purchasing power. With that, it’s only right to say that a Filipino family needs more than ₱25,000 a month to pay rent, put food on the table, and send kids to school.
Ernesto Pernia, the country’s ex-socioeconomic planning secretary, said in 2018 that two family members would need to each earn at least ₱21,000 per month to give their family a comfortable lifestyle.
If your family is earning a combined income of ₱42,000 per month, your household is considered to be living above the poverty line. Pernia, however, admitted this was just a top-of-mind figure and not the official number from the National Economic and Development Authority (NEDA).
Looking at the entire picture, maybe Pernia’s estimated figure makes more sense in today’s economic climate.
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What is a Family Budget?
A family budget is a plan for your household’s money. With a budget, you can see your household’s incoming and outgoing cash flow over a period of time.
A family budget comes with benefits such as the following:
- It keeps you from wondering where your paycheck went.
- It empowers you to direct where your money should go (e.g., needs, wants, unforeseen expenses)
- It prevents accidental overspending.
- It helps you manage your savings.
- It promotes transparency among family members.
How Should I Budget for My Family?
Budgeting should cover the different aspects of family life such as shelter, food, raising a child, and savings. To make budgeting work, you need to instill this mantra: spend less than you earn.
The general rule is to follow the 50-30-20 allocation:
- 50% of your salary goes to needs – Rent, food, transportation allowance, electricity, water, internet, insurance, and mortgage
- 30% of your salary goes to wants – Shopping, hobbies, vacations, entertainment subscriptions (Netflix, Spotify, and YouTube Premium, among others), and dining out with the family
- 20% of your salary goes to savings and debt payments – Regular savings, retirement fund, emergency fund, investments, and loans
Sample Family Budget in the Philippines
Refer to the table below for a sample family budget in the Philippines. Keep in mind that the 50-30-20 ratio is not a hard and fast rule. It may change depending on your family’s situation. As such, it’s important that your family has some leeway for unforeseen expenses.
Total Gross Monthly Income: ₱50,000 (combined gross income of spouses worth ₱25,000 each)
Total Net Monthly Income: ₱47,450 (combined net income of spouses worth ₱23,725 each) 
Number of Kids: Three
|Fixed Expenses||Budget Allocation|
|Transportation and Work Allowance||₱7,000|
|Variable Expenses||Budget Allocation|
|School Expenses (Public School)||
|Food and Grocery||₱8,000|
|Credit Card Bills||₱3,000|
|Monthly Family's Day Out||₱2,500|
|Online Subscriptions (Netflix and Spotify)||₱1,000|
Note that this sample family budget in the Philippines is for illustrative purposes only. Expenses are subject to change, depending on your family’s needs and lifestyle.
Tips for Managing Your Family Finances
As a modern nanay or tatay, you can do a lot to maximize your peso and run your household efficiently. Below are some tips for managing your family finances while dealing with inflation:
1. List Down Every Expense
Before creating a household budget, you need to figure out your family’s monthly expenses first. If you feel that everyone in your family spends unnecessarily, you’ll need to sit down and talk it out.
Talk about the bills that everyone has to contribute to, just to make sure that everyone’s on the same page. Next, put together all your expenses on a monthly basis. This list should include the following:
- Monthly Utility Bills
- Rent or Amortization
- Online Subscriptions
- Average Grocery Spendings
- Credit Card Statements
- Insurance Premiums
- Medical Expenses
- Car or Home Loan Payments
- Average Fuel Consumption
- Miscellaneous Payments
2. Categorize Your Expenses
It’s not enough to list down your expenses. As seen in the sample budget above, you need to categorize them into two types: fixed and variable.
Fixed expenses generally cost more or less the same every month. Electricity, water, internet, and amortization or rent are fixed expenses that usually comprise a good chunk of every family’s budget. Other expenses may include personal, housing, and car loan payments.
Variable expenses are the opposite. The cost of these expenses, which include groceries, credit card payments, and fuel, can differ every month. Expendable expenses like online subscriptions also fall under this category.
Listing every expense helps you decide which expenses are important and which ones your family can live without. This also gives you a better idea of your family’s true financial standing.
3. Compute Your Average Income
After listing down your expenses, determine whether your sources of income are enough to keep the lights on. You’ll want to determine monthly income based on the number of employed family members.
Here are a couple of calculations based on a household with four working members:
- Bi-Monthly Salary: As most employers use a bi-monthly payment schedule, simply add the two amounts to get your average monthly income.
- Paid Monthly Salary: Some employers pay out once a month, and this figure should stay as is unless your monthly income varies. In this case, add up four months’ worth of income and divide it by four to get your average.
- Weekly Salary: If you’re paid weekly, take the four income totals and subtotal them. Divide that number by two to get your average monthly income.
- Fluctuating Pay: Total the last four months’ worth of income and divide by four to reach the average, but this can change if your income isn’t always the same every month. You’ll have to look at the budget over and over again each month.
Try looking for job openings and encourage yourself and other family members to take up side gigs. If you happen to work at a company that implements a hybrid set-up, make the most of your excess time with freelance work.
4. Allocate Your Income Accordingly
Now it’s time to create a budget plan for your family. Take your total expenses and subtract the number from your total income.
If the difference is above 0, it means your average income is just enough to cover your monthly needs. If it’s beyond 0, it means you need to cut down on expenses.
You can use the sample family budget in the Philippines above as a template. But feel free to tweak and adjust it.
To see things more clearly, use a spreadsheet or any budgeting or expense tracker app. We recommend Microsoft Office’s simple yet organized template. If you want to make budgeting collaborative by involving your family members, Google Spreadsheets will do the trick.
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5. Make the Situation Clear to Everyone
Not every household has more than one working family member. A single-income household can come into being for several reasons.
A family member might unexpectedly lose their job. Or a parent might decide to stay at home with the children. A single parent might be running the entire household. Maybe an able-bodied member has to take care of elderly parents.
Whatever the situation is, it’s important to talk to every family member and explain why you need to make financial adjustments to your household budget. Maximize what you already have and build a budget that ensures all the household’s needs are met.
Whether living on a single income is a temporary situation or a permanent one, what’s important is making sure everyone understands what’s going on with the household finances.
6. Cut Back on Your Expenses
If the difference between your monthly income and your monthly expenses results in a negative number, it’s time to make some adjustments to your family budget.
Remove some luxuries and other unnecessary expenses your family can live without. If you’re part of a single-income household, take this tip to heart. In every family budgeting session, you’d need to trim some expenses in order to ensure you have enough to pay bills, grow your savings, and fund unexpected expenses.
Cutting back on expenses doesn’t mean that the family won’t get to have fun. For example, single-income households can enjoy a night in instead of spending too much at the mall.
7. Get Creative with the Way You Save
There are plenty of ways to save money. If your company has a hybrid or work-from-home arrangement, the money typically spent on transportation could go towards savings. But if you’re required at the office daily, you can pack your meals and switch to cheaper coffee.
Get your errands done all in one day to save up on gas. To eliminate a huge chunk of fuel and transportation expenses, ride a bike or walk to your destination.
You can then grow your extra savings through various ways, from starting an investment to opening an online savings account.
8. Take Advantage of Discounts
While extreme couponing is a foreign concept in the Philippines, there are establishments that use discount coupons to entice customers. It’s also cheaper to buy certain home supplies in bulk. Online delivery apps like Lazada and Shopee also offer vouchers and coupons for select brands and products.
Websites like Metrodeal, CashCashPinoy, and Deal Grocer offer promos and discounts for numerous restaurants. Discounts can go up to 50% and offers are not limited to dining.
For vacations and Christmas presents, coupon websites make family budgeting a lot easier.
9. Consider Getting a Credit Card
Speaking of discounts, another way to save money is to take advantage of your credit card’s perks. It might sound counterintuitive to use a credit card as a family budgeting tactic, but it has more benefits than meets the eye—provided you choose the right credit card and you have the right spending mindset.
Moreover, this plastic card offers convenience. You can book flight tickets and shop online. You can buy big-ticket items at zero interest. You can even pay tuition with a credit card.
To make your search easier, use an online comparison platform, such as Moneymax. You can filter your search based on your income, preferred perks, and other criteria.
10. Introduce the Concept of Sharing
This can be tricky when you have children in the family, but when you’re on a tight budget, it’s best to introduce the concept of sharing to help minimize monthly expenses.
You can start by having your kids share one room. This minimizes your monthly electricity bill and allows you to get rid of unused appliances in other rooms. You can now use your extra room for your online business or work-from-home setup.
Have your kids share other things as well. For example, buy a home computer for everyone’s online learning. You probably don’t need to give them each a smartphone or tablet, so have them take turns using it.
You can also save on online subscriptions by availing of a family plan. Services like Spotify, Apple Music, and YouTube Premium offer bundles for budget-conscious families.
11. Deal with Debts as Soon as Possible
You may not realize it, but certain debts take more than the principal amount from you. Whether it’s a credit card debt or loan, you’re also covering the interest. And the longer you pay for your debt, the longer you pay for the interest.
If you’ve got multiple debts with different banks, make payments easier with a debt consolidation loan. This allows you to focus on a single payment every month. You may even enjoy a lower interest rate.
12. Buy Your Food from Palengke
Even if you’re already used to shopping at the grocery, try heading to your local palengke and talipapa to cut corners. The options there are more affordable, not to mention more fresh. Plus, you can haggle with the vendors. Just don’t overdo it!
Rely on a shopping list to keep yourself from buying unnecessary items. While you’re at it, schedule grocery shopping to avoid unplanned trips.
Pro Tip: On your grocery day, eat before leaving the house. If you shop while you’re hungry, you may find yourself adding food to your grocery cart or dining at a fast-food restaurant after shopping.
13. Cook Your Own Food
If you’ve noticed in our sample family budget in the Philippines, food is pretty expensive. To minimize expenses, cook your own food rather than ordering via delivery apps or eating out.
Meal planning helps you save money because it encourages you to buy ingredients in bulk and store food for later. On top of that, you avoid food wastage.
14. Practice Electricity-Saving Habits
Electricity is expensive, but you can lower the costs with a few simple habits. Here are some of them:
- Unplug appliances when not in use. Remember, appliances on standby still use electricity.
- Replace your old lights with LED lights as they can save as much as 50% energy.
- Dry your clothes under the sun instead of using the dryer. Your clothes will even smell fresh.
- During the cold season, limit your use of the air conditioner. In addition, don’t use this appliance when you’re alone at home.
- Use an aircon-to-fan timer to reduce air conditioner usage. You won’t really feel the cold air while deep in sleep.
Let’s face it, budgeting isn’t exactly a fun thing to do. But since unplanned spending can hurt your family’s financial health, it’s a life skill you must learn. Think of budgeting as a way to take care of your family. It shows what kind of household manager and parent you are.
Budgeting also empowers you, as you can dictate where your money goes. It helps you determine what to keep and what to let go. However, keep in mind that a budget is not supposed to be static. It should evolve based on economic conditions, changing family needs, and career milestones.
To shape and improve your financial plans, check out different templates, like the sample family budget in the Philippines above.
-  Highlights of the Preliminary Results of the 2021 Family Income and Expenditure Survey (Philippine Statistics Authority, 2022)
-  The Family Living Wage (IBON Foundation, 2021)
-  NEDA: Family of 5 needs P42,000 a month to survive (Philstar.com, 2018)
-  Income Tax Calculator (National Tax Research Center website)