How to Make a Household Budget

In these uncertain financial times, it is more important than ever to know how to make a household budget. When you have a household budget, you will be better able to manage your finances, achieve your goals, and reduce your debt. Here are five steps to help you know How to Make a Household Budget:

1.       Identify your total household income – What is the amount of money that is brought into your home every month? In order to know how to make a household budget, you need to identify the true amount of money (after taxes) that you bring home from your income, and other possible sources of income, such as stock profits, etc.

2.       Identify your recurring household expenses – Be honest and be thorough. Focus on expenses that occur every month when you are working on how to make a household budget. This may include the following:

-          Rent/mortgage

-          Groceries

-          Gas

-          Child care

-          Tuition

-          Sports/activities fees

-          Gym membership

-          Medications

-          Credit card bills

3.       Identify your variable expenses – In order to know how to make a household budget, you need to be honest about your variable expenses. These include items you spend money on that aren’t a necessity and not a fixed, recurring cost. Examples may include:

-          Clothing, shoes, etc.

-          Eating out (include fast food, your Starbucks fix, any food or drink you spend money on outside of the supermarket)

-          Personal expenses, such as hair salon visits, spa or nails, etc.

-          Dry cleaning

-          Gifts

-          Entertainment, such as movies, etc.

4.       Identify the essentials – Now look at your expenses compared to your income. In order to know how to make a household budget, you must know how to live within your income. If you are spending more than you are making, look honestly at your costs, both fixed and variable. Where can you eliminate or cut back in order to save money?

5.       Identify your monthly budget – Start to make your household budget by writing down how much you are going to spend each month on your fixed expenses and variable expenses. Add a savings column as well – it doesn’t matter how much you start with, as long as you set some money aside to save. Then start living within your budget. Write down your costs as you go and stay within the limits you have established in your budget.

Of course, to make a household budget work, you have to stick with it. Put your budget somewhere you will see it every day, like on your fridge. Be honest and accountable to yourself and your family as you spend your money and request that they do the same. Ask that everyone in your household tries their best and sticks with the budget – resolve to use your budget for a minimum of three months and see where you are at the end of three months. Hopefully you will be inspired to keep on going, reduce your debt, and manage your household budget on a long-term basis!