How do I Develop a Home Budget?

Subtract your expenses from your income to figure your disposable income.

Subtract your expenses from your income to figure your disposable income.

Most household budgets are based on how much extra money couples need to save per month to reach a goal. Newly hitched couples budget their monthly expenses to buy a car or home, invest or save for a summer vacation. The first step in developing a home budget is setting your financial goals. For example, if you want to increase your savings to $500 per month, you will need to identify expense areas to cut.

Items you will need

  • Pay stubs
  • Bank statements
  • Credit card statements
  • Checkbook
  • List of monthly bills
  • Budget software

Get out copies of both of your latest pay stubs. Add the pay stubs together to figure out how much you both make per month after taxes. Write that number down on a notepad or in a notebook.

Find your latest copies of bank statements, bills and payment booklets. Take out your checkbook. Divide a page in your notebook in half. Draw a line down the middle of the page. Write "Fixed Expenses" at the top of the left column and "Variable Expenses" at the top of the right column. Make a list of your monthly fixed expenses, which are bills that stay the same. Write down fixed expenses such as your mortgage, car payment and car insurance. List variable expenses such as your phone, electric, grocery and clothing expenses. Include expenses such as medical bills and car repairs by estimating a monthly average for them.

Add up all of your fixed and variable expenses. Subtract your total variable and fixed expenses from your monthly income. Record the difference between your income and expenses, which is called your disposable income.

Calculate how much your disposable income falls short of your desired monthly savings goals. Write down $200, for example, if you are currently saving $300 and want to save $500 per month.

Plug your income, variable and fixed expenses into a budgeting software program. Look for wide variances in your expenses based on what your budget software recommends. Make a check mark by your clothing expenses, for example, if you are spending 10 percent of your income on clothes and the budget software recommends 5 percent. Look for other expenses, particularly variable expenses, that you can potentially cut back.

Evaluate all the expenses in which you exceed the budget software recommendations. Cut the expenses that you need to reach your monthly savings or disposable income goal.

Create a new budget that includes all the new expense allocations. Evaluate your expenditures every week so you do not exceed your budget.


  • Evaluate your home budget every three to six months. Determine if any fixed expenses or debt can be eliminated soon. For example, you may be able to pay your car off in six months. You can then either increase certain expenses that you are having trouble maintaining or increase your disposable income.

About the Author

Rick Suttle has been writing professionally since 2009, covering health and business for various online and print publications. He has worked in corporate marketing research and as a copywriter. Suttle holds a Bachelor of Science in marketing from Miami University and a Master of Business Administration from California Coast University. He is author of the novels "Hell Year" and "Suicide Peak."

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