Developing a Household Budget

If you're hoping for a new car, an island vacation or that couch you've been drooling over, a household budget can help you get it. As a bonus, you and your partner will be able to spend more time enjoying each other and less time arguing over money. Developing a household budget may not be fun, but it is an essential part of smart money management and can help free up funds for remodeling projects, new toys and trips.

Step 1

Track your spending for a month. Use software on your cell phone, sticky notes in your wallet or a notebook. Keep track of everything you purchase, including utilities, meals out, coffee, snacks at work and ATM fees.

Step 2

Create categories for expenses in your life, such as utilities, rent or mortgage payments, insurance, medical costs, clothing, entertainment, debt, savings and food.

Step 3

Evaluate your spending using the records you kept last month. Divide your expenses into each category and allocate your income to cover costs. Aim to save at least 10 percent of your income each month.

Step 4

Cut costs where you can. Reduce, but don't totally eliminate, luxury spending. Go out to dinner once a week and cook in a bit more, or take a camping trip instead of visiting a bed and breakfast one weekend. Prioritize your spending, focusing on the things you enjoy most. Budget some discretionary spending money each month, choosing an amount that fits your lifestyle and income.

Step 5

Revise regularly. Expect to sit down and talk about your budget frequently, even if you'd rather not. Adjust spending as needed, allowing more or less in different categories. Make sure you have similar goals and that you are working equally hard to make your budget a help rather than a hindrance to your relationship.

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