A plan doesn't mean much if there's no action to follow it up. If you've decided to take control of your household budget and manage your finances more responsibly, create an action plan to increase the chance that it will benefit you and your partner. Include a few key elements in your budget action plan to make it an effective tool to use on a daily basis.
Before creating your budget action plan, decide on a software program to use. The choice depends on your personal preferences. Some people like to use spreadsheet software because it's simple to use, allows you to list details of your budget in a straightforward format, and perform calculations automatically. You can also use a software program designed specifically for money management. These programs are helpful because they allow you to set up reminders in addition to listing and calculating data about your budget.
List Bills and Income
The first step of creating your action plan for a household budget is to put all of your cards on the table. List every bill, including variable expenses like groceries and entertainment, in your software program. Include the amount of the bill, the name of the person you have to pay and the date each bill is due. Once you have your bills listed and totaled, enter your monthly income as well so that you can compare your income with your outgo each month. This lets you know right off the bat if have sufficient income to start successfully moving forward with a new plan. If you do not have sufficient income, go through your bill list and start making cuts. Maybe you don't need 100 sports channels on your television. You or your partner (or both!) should also consider getting a new part-time job to cover the deficit as well.
Once you have a comprehensive listing of your expenses and income, start listing your goals on your budget action plan. For instance, one of your goals may be to pay off your debts within three years. You may also have a goal to save up $10,000 in a year to put down on a new home. Be specific by adding a time line for when you want to achieve your budget goals.
Once you have your bills and goals listed, it's time to prioritize them. Prioritizing your goals and bills gives you a clear perspective so that you can start taking appropriate action. First, prioritize your list of general goals. This way you can start from the top of the list and work your way down to take the necessary action to achieve each goal. Next, sort your list of bills by importance. In many cases, the bills listed are directly related to your general goals. For instance, if one of your goals is to pay off credit card debt, you should prioritize your credit card bills in the order you want to pay them. Start putting extra money toward each card to get rid of the balance more aggressively. If another top goal on your list is to save money, you can put "Savings" as a high priority item on your list of expenses.