What Should I Consider When Making a Household Budget?

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  • Written By: wiseGEEK Writer
  • Edited By: O. Wallace
  • Last Modified Date: 07 October 2019
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A household budget is a way of keeping your expenses in line with the amount of money you have to spend, and it can be helpful in understanding which areas of your budget could use some trimming or expansion. It begins with two very simple things: knowing how much you make and knowing how much you spend. When you first start to create a household budget, it can actually be a revelation to find out how much you actually spend, and exactly where the money goes, and it is often this knowledge which can help inform your expenses in the future.

It’s not very meaningful to make a household budget without first getting an idea of what you usually spend. A first step is to spend a couple of weeks to a month tracking all your expenses. You can usually list standard expenses like rent, car payments, utility payments and the like, since these may be unchanging or change very little. Subtract these amounts from your take home income.


For the amount of time you’re tracking your standard expenses, keep a notebook handy and give yourself 10-15 minutes a night to record all expenses. Count everything you spend from ballet lessons to trips to the grocery store to buy lettuce. Include birthday gifts, money for gas, and any money for extras like dining out and going to movies or renting DVDs. You’ll want to keep a running total of what you spend, and where you spend it, so consider having categories such as: Gifts, Education, Groceries, Entertainment, and Dining Out. Alternately, use a computer program like Quicken®, which will help you set up these categories and do the math for you.

After you have looked at your monthly expenses, you’ll want to see where you might be spending too much or too little so you can create a household budget. For instance, you may not want to reduce your grocery amounts by much because those are typically things you need to have. On the other hand if 10-20% of your income is being used on dining out, you might decide to limit dining out in the future to reduce expenses. When possible though, don’t limit all luxuries or entertainment, but give yourself a reasonable amount of treats while still being able to sock some funds away.

A household budget may also be helpful if you want to bring down existing debts. You can redirect some of your excess funds into paying more than the minimum balance on credit cards, or you can alternately see if there is any money left over which might be saved for future emergencies. Mostly though, the household budget answers the question of where the money goes, and if you are continually keeping track and staying on budget you will know the answer to this question.

There are online budget calculators that may help, and books devoted to this subject. Yet from a simple perspective you can determine what expenses you have, where you can trim expenses and where you ought to be investing the greatest share of your funds. Once you have a budget established, continue to track expenses since you know you’re staying on budget, and periodically revisit the budget to see if rising costs are changing the way your budget works.


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Post 3

Bank statements or online banking information can be great resources when making a household budget. I don't usually keep receipts, which makes it very hard to know what I'm spending at restaurants. But I can keep track of how much I spend monthly for dining out with my online banking information. I just add up all debit transactions from restaurants.

When I first calculated my dining out expenses, I was shocked at how high it was. I have reduced it by dining out only twice a week at most.

Post 2

@turquoise-- First of all, have you calculated all of your expenses correctly? How did you make the spreadsheet?

You can actually use a household budget template that's available on most computers. Or you can get these templates or software online. These are much easier to use and calculate things for you. It will also show you how much income you have left for the month or if you're over your budget.

If all the numbers are correct and you are over the budget, then you really have two options: find a way to reduce expenses or find a way to increase income.

Post 1

I made a simple spreadsheet budget for income and expenses. I basically spend all of my income and have no money left for savings or miscellaneous things like entertainment. Most of the expenses can't change because they are things like rent and utilities. What should I do?

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