No single household budget plan suits every person's financial situation or spending habits. Instead, create a budget list that includes categories and financial goals that reflect your lifestyle, pay schedule, expenses, challenges and savings goals. A household budget list should cover every potential expenditure, or have a category for surprise expenses, so that you can persevere when emergencies arise and attempt to bust your budget. Consider your budget a changeable entity that adapts as your life and financial goals change.
Establish a format for entering your budget information. A simple sheet of blank paper, divided into two columns for income and expenses, may suffice. Other people may prefer a more nuanced format that includes various categories and information for savings goals. You can use an Excel spreadsheet or an online budget worksheet like those at Mint.com.
Define your categories. Typical household budget lists include categories for housing payments, be it rent, mortgage or condominium fees, as well as utilities, internet, cable, trash, car expenses, insurance premiums, medical, dental, gas, public transportation, clothing, groceries, tuition, personal loans, home equity loans, clothing and personal care. Some of these quantities may change by the season, so you can either average your expenses or add a cushion to certain categories to accommodate fluctuations.
Account for outstanding debt. High-interest debt, such as credit cards or some loans, demands priority on your household budget. Create a plan dedicated to tackling your high-interest loans with disposable income, and work your way through to the smaller loans until you have eliminated high-interest debt.
Engage in a little chaos theory. Rather than foresee every potential problem, such as the washing machine breaking or someone needing medical care beyond insurance coverage, many people save money in two kinds of funds. One fund, a miscellaneous category, helps account for daily surprises such as gifts, cocktails or a great pair of shoes on sale. The other fund, an emergency fund, covers more serious financial drains.
Set financial goals that align with your household budget. If you have dedicated a monthly sum toward credit card debt, make the goal to reduce your debt by a certain percentage within six months. If you have no high-interest debt, set a goal to establish an emergency fund, save for a vacation or invest in a retirement plan.
- Consult your budget and financial records every couple months to ensure you stay on track with your spending and savings goals.
Nina Makofsky has been a professional writer for more than 20 years. She specializes in art, pop culture, education, travel and theater. She currently serves as a Mexican correspondent for "Aishti Magazine," covering everything from folk art to urban trends. She holds a Bachelor of Arts in English from Mills College.