How Much Should The Monthly Income Of A Family Of 4 Be?

In a survey conducted by the National Economic and Development Authority (NEDA) in 2016, a Filipino household of four should have a gross monthly income of P120,000 to live a "simple, comfortable life." This which implies owning a car and a medium-sized house, traveling occasionally, and sending two children to college.

Meanwhile, data from the Philippine Statistics Authority (PSA) in 2021 showed that the average income of a Filipino family is at Php 307,190 or about Php 25,091 per month. Raising a family at this time is not cheap, and so we asked parents: how much is the monthly income required for a family of four?

Monthly income for a family of four: Parents weigh in

Parents at the Smart Parenting Village, a Facebook community, shared their thoughts on how much is the monthly income required for a family of four. Some members say, it depends on the kids' age and the family's lifestyle, while others are specific and say it ranges between Php 50,000 and Php 100,000.

Mommy Wilma agreed with NEDA that a family with an income of Php 120,000 to Php 150,000 is able to live simply but comfortably. "Php 150,000 up if may mga luho and a few levels up from a simple life." She defines families who live simply as one that do not eat out every day, not buying items from signature brands, yet able to still travel once in a while. "As for 'living comfortably," she explained, "yung kaya pong ma-afford yung comforts like mag-aircon ng matagal pag summer, makabili ng bahay na may sariling room mga anak, may sasakyan, hopefully debt free, financially stable at may emergency funds. Yung hindi po maco-compromise yung comforts ng quality living like kaya magbakasyon once or two times a year pero hindi naman splurge sa high-end hotels."

On the other hand, MommyRegina, a mom of three, said they have a livable income of around Php 40,000 per month. "For us, family of 5. Husband is currently working out of town, I'm a work-from-home and breastfeeding mom, looking after 1 preschooler, 1 toddler and 1 baby. Income namin is less than Php 60,000."

She then shared how she manages to budget their income. "I always list down first our fixed monthly expenses kasi ihihiwalay ko na agad. Doon ko na isusunod yung budgeted allowance for food and groceries, or other variable expenses, like essentials for kids and household para ma-check ko rin kung ma-a-adjust ko lalo na if may stocks pa sila. I always want to keep it simple lang. Walang magarang lifestyle, but still can afford naman if may biglang needs/wants kami na simple lang." Mommy Regina added, they are still working on saving up for their emergency funds, but having an insurance plan is enough for them for now.

As a mom who is also managing the budget of a family of four, and with the current inflation rate, I attest to what NEDA proposed because my children will grow, and the demands will too. My husband works full-time at a BPO company, and we also own a small enterprise. We do side hustles and freelancing gigs as well. With our current income streams, we can budget our finances well and divide them into segments. We own a simple car, mortgage a home, and send our 5-year-old daughter to a decent private school.

How to create a practical and effective household budget

Budgeting should be discussed within the household to get a hold of your finances. Here's a step-by-step guide to help you create a practical and effective budget:

1. Determine your income.

Whether you are a one-income, two-income, or multiple-income household, it is ideal for the husband and wife to talk about their income. Calculate your total income, including salary, side hustles, and bonuses.

2. Track your expenses.

Track where you want to spend your income. Knowing where your money goes will save you from future troubles.

3. Create budget categories.

Categorize all your expenses.

• Tithes and Offerings. Everything that we have is just borrowed from a Main Source. Paying tithes and offerings can help us be more provident with handling our finances.
• Housing: Rent or mortgage, property taxes, home insurance, maintenance
• Utilities: Electricity, water, gas, internet, mobile phones
• Food: Groceries, dining out
• Car or Transportation: This budget allocation is essential whether you are paying for a car loan or commuting.
• Education: It includes your current child's tuition fees, and if the budget permits, you can start saving for future education
• Emergency Fund: Save for emergencies. This should equal 3-6 months of household income, but you can start with P50,000.
• Healthcare: Allocate for your family's health, children's vaccines, or health cards.
• Savings and Investments: Emergency fund, retirement, investments
• Debt Repayment: This may include other loans or credit card payments
• Entertainment and Recreation: This segment is not a need, but it can help us build traditions. You can include movies, dining out, family activities, travels, shopping for clothing, and more.

4. Allocate your income.

Each allocation will depend on the household and its current priorities.

Here's a sample computation:

• Tithes and Offerings. 10%
• Housing and Utilities: 15%
• Food: 15%
• Car or Transportation: 5%
• Education: 15%
• Emergency Fund: 5%
• Healthcare: 5%
• Savings and Investments: 10%
• Debt Repayment: 10%
• Entertainment and Recreation: 10%

Ways to increase your family income for a simple and comfortable life

1. Do side hustles.

Side hustles can be additional jobs or projects outside of your employment. Nowadays, the digital world has shown us many ways to find suitable side hustles for the household, such as freelancing (writing, graphic design, programming), ridesharing/delivery (offer services in Grab, Angkas, or Joyride), tutoring, and offering your services to others. Read this story about 'raketerong dads.'

2. Explore passive income streams.

Passive income may require you to invest initially, and as you work on it first, it can help you generate another source of income. Later on, money will work for you. Some examples are investing in the stock market, in PAG-IBIG MP2 Savings, affiliate marketing, or creating digital products. Read this MP2 guide here.

3. Open a small business.

Starting your own business can allow you to unleash your creativity. You don't always need a lot of capital to start one. You can start small and think big—pre-order and offer products to friends first, then when you earn from it, you can start expanding. Currently, e-commerce businesses and digital marketing are in demand. You can also try risking franchising or local enterprises. Learn about starting a biz from mompreneurs here.

4. Advance your career.

Work on your promotion by developing your skills. Get certifications, upskill, and network with others. Check out online courses here.

It’s always easier to blame others, such as our family, the government, the inflation rate or other reasons for our financial struggles, but we can't control these outside sources. We can only control ourselves, so we are responsible for our success. One of the most powerful investments we can make is in education, as knowledge about managing finances or enhancing our work skills is invaluable and cannot be taken away. We have the power to choose what kind of life we want to live. We only live once, so live it best.

For more tipid tips and strategies, join us at the Smart Parenting Village, a support group where parents can talk about finances, parenting, and more.