Expensive housing, two leased cars and costly hobbies are fine for a couple with two incomes. Even with modest salaries, dual earners can afford a lot. But that changes suddenly when the couple becomes a family, and their income is noticeably reduced. If you continue making financial decisions based on impulse and don’t alter your fixed costs, sooner or later you’ll find yourself struggling. It’s difficult to lower your standard of living from one day to the next. So, it's best to start early if you are thinking of starting a family. 

How to draw up a family budget in 3 steps

A budget should list all your income and expenses so that you can allocate your income optimally. Budgetberatung Schweiz provides blank budget templates for you to fill in. They’ll help you create a personal, customised budget.

Step 1: Enter current amounts

The template features four blocks for budget items: fixed costs, household costs, personal expenses and provisions. These are the standard expense items in ordinary private households. Regardless of whether your bills are due on a monthly, quarterly or yearly basis, calculate them all for the year and the month.

What does that mean? For example, divide your Serafe bill (radio and television licence fee), which is CHF 365 per year, by 12 months, and enter the result (approximately CHF 30) as a provision in the “monthly” column. This is the only way to see how far your income goes. 

Start by entering all your income and expenses in the template. Then list further expected costs, such as dentist or education fees and expenses for things you'd like to have, such as holidays. You probably know the exact amounts you pay for rent, taxes and insurance, so they are easy to list. Household, clothing and other expenses can be estimated based on your spending in the past months or years, or you could refer to our sample budgets.  

Step 2: Adjust

Ideally, your income and expenses should balance each other out or you should be left with extra funds. If your income falls short of your expenses, you should go through your budget again, point by point, and consider where you can save. If the difference is small, it might just be a matter of adjusting your personal expenses, which is something you can do straight away. If the difference is large, you might have to consider moving to a cheaper apartment or giving up your car to solve the problem in the long term. Alternatively, the shortfall could be offset by additional income. 

Budgetberatung Schweiz has put together sample budgets for various life stages, household sizes and income levels. Some users may find these examples unrealistic. However, they simply show the direction you should be moving in if you don’t want your household to go into debt.

Step 3: Long-term perspective

Your civil status makes a big difference when it comes to money and provisions. Whether you are married or cohabiting, the way your income is split will affect your professional development opportunities and hence also your salary level.  This will in turn have an impact on the division of roles, social insurance and pension provision.

 Hence, couples should always use good times to arrange the things that might become difficult to arrange if things were to take a turn for the worse. What’s more, you should get neutral advice on employment contracts, contracts you enter with your cohabiting partner and other contracts if you are not sure if they are a good fit for you.

The fact is: if you stop to work in full or part in order to raise a family, you will have to absorb higher financial losses in the long term than your partner will. This applies especially in terms of pensions and even if you are married. This is especially true if your partner dies before you.

You should also know that shared parenting, where both parents work part-time, also has long-term consequences for social insurance and pension cover, which needs to be considered. 

Summary

A budget is not a straitjacket, but a practical support to channel your money to the places where you want it to be. If you have enough income to cover your living costs, your budget will help you meet medium- and long-term financial goals and avoid short-term temptations. If you review your budget regularly and make adjustments when things change, you can rest assured that your income will last until the end of the month. That’s a good feeling!