How to Make a Household Budget

Budgets & Banking, Planning & Saving, Shopping Savings
on April 15, 2012

A household budget can help organize your spending, allowing you to meet your needs but still be able to indulge in some wants. If you are new to creating budgets, don’t panic. You can create a household budget that’s simple and easy to follow by considering a few tips.

Determine expenses. Before making any type of budget, you need to know how much money is spent on a weekly or monthly basis. Begin by making a list of fixed expenses. This typically includes any rent or mortgage payments; credit card payments; utilities (including water); student loans; car loans; health insurance (if your employer does not provide it); any other insurance policies; and bills for cell phones, cable/satellite services and/or Internet service. Also make a list with your variable expenses. These include expenses you have each month but change in amount. Some examples are groceries, fuel, entertainment (including dining out) and clothing.

Consider a worksheet tool. If the thought of listing expenses in a notebook seems exhaustive, consider using a handy computer worksheet. Household budget worksheets can be found online through Microsoft, Kiplinger budget tools and even university extension offices such as the Utah State University Cooperative Extension Office.

Needs vs. wants. When your expenses are more than your income, it is time to cut back. To cut back, determine your needs versus wants. Items such as clothing and entertainment can seem like they should fall into the needs category. However, less expensive alternatives may be more budget-friendly. You need clothes for work, but do you have to pay full price for designer labels? Take advantage of sales and coupons, and reduce the number of new outfits purchased each month. Shop stores that offer name brands for less to save even more. Cut back entertainment costs by budgeting only one first-run movie night a month. Instead of busting your budget with a night out with friends, save the cash and plan a night in with those same friends.

Reducing grocery expenses. After rent and loan payments, groceries or food expenses can be one of the biggest parts of a budget. Everybody needs to eat, but if you shop smart, you can still eat healthy and save on your budget. Reduce grocery expenses by never shopping hungry, always making a list, making weekly menu plans and saving by using coupons, store discounts and other deals. Limit your dining out to one or two times a month to save even more.

Staying on track. Once your budget is created, it will only work if you stick to it. That means being honest and recording all expenses, even when you over-spend. Don’t beat yourself up if you splurge on a lunch out one day. If you spent $30, see where you can recoup that amount in your variable expenses, perhaps by not buying a new blouse that month.

A household budget can help keep you out of debt while allowing you to save for a rainy day.

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