How to Balance a Home Budget

by Louise Balle, Demand Media

    Creating your own home budget may seem at first like you're limiting yourself since you have to follow strict guidelines for managing your money. But over time you may find that it actually liberates you from the headaches and worries of financial stress and puts you in control. Instead of going into every month unsure of where you'll end up money-wise at day 30, you'll know exactly what you need to do each month to achieve your financial goals. One of the more difficult parts of creating a home budget is balancing your income and expenses. A true balance means having neither a surplus nor a deficit.

    Step 1

    List all of your expenses and income, get the totals, and determine the final deficit or surplus. Your expenses less your income results in a deficit, while income minus expenses will leave a surplus.

    Step 2

    Use your extra money, when you have it, for future needs, like home renovations, a new vehicle, trips or a savings account so that your budget stays in balance if you have a surplus. Deduct these extra amounts from your income as an expense so that both the income and expense columns are equal.

    Step 3

    Look at your list of expenses first if your income and expenses run very close from month to month or if you have a deficit. Identify the items that are nonessential, such as eating meals out each week, reducing cable channels, and selecting a less expensive internet connection option. Decide if you're willing to cut them out completely. Nonessentials should be the first cuts from your budget if you're trying to balance your home budget. Deduct or reduce the amounts for nonessentials and review your deficit again to see if that has created balance.

    Step 4

    Sort through variable essential bills next. These are bills that may change every month, such as electricity and cell phone bills. Call your service providers to reduce your plans, and change your behaviors to cut down on those bills. For instance, make it a point to shut off the lights when they are not in use to save electricity. Review your budget again after making changes to see if it is balanced.

    Step 5

    Review your fixed essential bills last on your expense list to see if you can make changes to balance your budget as a final resort. Essential bills include your rent or mortgage, debt payments, and car insurance payments. If necessary, inquire about refinancing debts; change plans, if possible, to save on expenses like car insurance; or consider moving to a less expensive apartment building or house. If you make changes to these fixed payments, update your home budget again to see if it balances now.

    Step 6

    Review your sources of income next in your quest to balance your budget. Ask your employer if you can increase your work hours to increase your monthly income, or look into part-time employment. Consider an entrepreneurial venture, or try to sell your unwanted items to raise funds to increase your income until your budget balances.

    About the Author

    Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.