How to Create a Household Budget

Start by Writing Down Your Income

Creating a budget starts with understanding how much money you bring in each month. Start by writing down your regular income sources. This includes your salary, any side hustle income, and any other money you may receive regularly. If you’re not sure of your total monthly income, look back at recent bank and credit card statements.

List Your Regular Expenses

The next step is to list your regular expenses. These are expenses that you pay every month. This includes rent or mortgage payments, car payments, utilities, insurance, and loan payments. If you regularly buy groceries or put gas in your car, add that too.

Track Irregular Expenses

Irregular expenses are things you don’t pay every month. This includes things like car repairs, vet bills, and gifts. To track your irregular expenses, you need to look back at your bank and credit card statements from the last several months. To get an accurate picture, include the last 12 months of spending.

Set Financial Goals

After you have a better understanding of your income and expenses, it’s time to set financial goals. Do you want to save up for a down payment on a house? Do you want to travel more? Setting financial goals is an important part of sticking to a budget.

Create Your Budget

Once you have your income, expenses, and goals, you can create your budget. Assign each dollar of income to an expense. Then, set aside some money for your financial goals. Make sure you leave some money for fun, too.

Sticking to Your Budget

Once you have your budget created, stick to it. This means tracking your spending each month. You can do this by using a budgeting app or by writing down your expenses. As life changes, you may need to adjust your budget. That’s ok. Just make sure you’re staying within your budget’s guidelines.