The Best Budgeting Strategies for a Midsize Family

Just like your kids’ rooms, managing money can get messy.

Consider changing the beneficiary of your prepaid tuition plan if it better fits a different child than for whom it was originally intended.
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The Robinsons split a two-story house with another couple. "The house costs $2,000 in rent, and right now, we're paying $1,100. But they're moving out in November, and from then on, we'll have the full $2,000 in rent," Robinson says.

Each month, he and his wife also pay $300 for their 3-year-old daughter's preschool, $250 for their family-friendly SUV and put $500 toward paying off their credit card debt.

Plan meals. Look at it this way: If you have two children and everyone eats three square meals a day, whether at home or work or school, you have 21 meals, or 84 servings of food, to think about every week. If you don't budget for food with a big family, overspending may hurt everyone far more than overeating.

And the older your kids get, the harder it is to keep the food budget under control, says Anna Peterson, a 52-year-old part-time, self-employed mental health counselor in Frederick, Md.

"Our biggest problem staying on budget is eating out," Peterson says. "It's easy and enjoyable to eat out. No one has to go shopping, cook or clean up."

But Peterson recognizes that the convenience comes with a price. "I can cook spaghetti with meatballs, bread and salad for a family of five for the cost of one meal at Olive Garden," she says. "Eating steaks out for a family of five can be more than $150. A pot roast can feed us deliciously for $30."

[See: 10 Ways to Save on Food Costs.]

She and her husband, Mike, a railroad welder, have three children: a 22-year-old son and two daughters, 17 and 14. The Petersons' combined income is slightly over $200,000, and their house, student loans and two of their three car payments are paid off. The third car still has another 18 months to go, with a monthly payment of $450.

From a bystander's point of view, the Petersons seem to be doing well financially, but Mike is 59, and "we have not saved well for retirement," Anna says. "We will have Railroad Retirement, which is [a retirement program that's] higher than Social Security, but not enough for retirement, according to our financial planner."

This is why Anna Peterson is constantly reevaluating what the family spends money on. She says their second child had three-quarters of her first year at community college paid for through merit scholarships after they urged her to apply. "We wish we had encouraged our oldest child to look into scholarships more," Peterson says.

And with movies, the family now just rents them instead of buying. "How many movies are really re-watched?" asks Peterson, who adds that she also now goes to the library instead of the book store. "Little things add up."