Setting Up a Home Budget

Create a budget by looking at what you usually spend money on.

Create a budget by looking at what you usually spend money on.

Setting up a home budget is the process of determining where and how you want or need your money to go each month. Budgets can be designed to work weekly, but most ongoing bills are sent monthly, so it's less confusing to arrange a monthly budget as well. By arranging your budget carefully and following through with your plans, you can start setting aside extra money for emergencies, special events and big purchases.

Write down all of your current household bills and expenses. Include monthly items such as the cable bill and rent, plus infrequent bills such as quarterly insurance payments and annual vehicle registration fees. Try to think of everything you spend money on each month even if you don't receive a bill for it: Groceries, nights out with friends, and buying new clothes or jewelry are common additional ways we spend money each month.

Write down an estimated dollar amount next to each item you wrote on the bills and expenses list. Create monthly estimates for anything that doesn't have a regular set amount.

Combine related expenses and bills into more general categories such as "Entertainment" and "Household." By creating broader, generalized categories you'll make it easier to budget for each area and leave yourself more flexibility. If the entertainment category has $20 available to spend for example, you can choose to use that for a night on the town or a rented movie instead of feeling locked in to having money available for just one thing.

Add the estimated monthly dollar totals from each individual expense or bill item to the broader category that you've chosen to merge it with. If movies and dining out each had an estimate of $50 per month for example, when you merge them into a general entertainment category you'd show an estimated monthly spend of the two combined: $100. The final broad categories and the dollar amounts assigned to each are now your official home budget. The goal is to try not to spend more from any given category than you have budgeted to it.

Items you will need

  • Current paycheck stubs
  • Current bills
  • Current credit card statements
  • Checkbook ledger or bank statement


  • Add up your total take-home pay from any and all regular income sources. The take-home total is important because you can only manage a home budget with actual income you have available. Double-check that the total of all your expense and bill categories isn't more than your total income. If it is, reduce any and all expense categories until the total is equal to or less than your income.

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About the Author

Kathy Burns-Millyard has been a professional writer since 1997. Originally specializing in business, technology, environment and health topics, Burns now focuses on home, garden and hobby interest articles. Her garden work has appeared on and other publications. She enjoys practicing Permaculture in her home garden near Tucson, Ariz.

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