We work hard to earn a living. Therefore we should make sure we spend the our hard earned money wisely. The best tool anyone can use to access how to carefully spend that hard earned money is a household budget.

This tool allows you to see at a glance what income is coming in, where that money is going (and what that money is paying for) and to calculate how to put away a bit into savings each month.

calculator and persons hand writing household budget in notebook with pen

Before we dive into exactly what a budget can do for us, let’s go over what can easily happen when we don’t track income and expenses.

We may end up spending more than we’re bringing in a given month (or two, or three). Over time that can put us into some pretty stick situations financially and emotionally. We may also spend a lot more than we’d like to believe on things like entertainment, fees or random one use items.

Having a household budget gives you more control over where you want to really spend your hard earned cash. Maybe that’s dinner and a movie as a an occasional date night, but maybe it isn’t.

Wouldn’t it be nice to know you are making that choice and know you can do it without it being a financial worry?

Track Where Your Money Is Going

A budget simply tracks your money. You record where your income is coming from and then write out everything you spend it on. Begin with your regular monthly bills like mortgage/rent, car payments, insurance, utilities, and go down from there.

What’s left after all the bills are paid is your fun money and savings. It is important to allow yourself a little fun money to make memories and enjoy your income, but you also need to put a little away in savings bit by bit to save for emergency funds.

Identify Things You Waste Money On

Writing it all out and having it in front of you helps you identify things you’re wasting your money on.

It makes you reconsider if you really want to spend well over $150 a month on a cell phone plan or $200 on UberEats. Go through your expenses and reevaluate if this is REALLY how you want to spend your pay check.

Also looks closely at the fees you are paying with credit cards, bank cards, and any subscriptions. They add up over time, by the end of the year they can be up to $1000 is fees. See if you using the best bank account/credit card with minimal fees. That’s money you could be putting in savings and earning interest on.

Be Proactive About Savings

Saving money without a planned household budget is difficult to achieve. You may have the best of intentions to put away some money for saving here, but without a plan it can be easily looked over and forgotten.

A budget gives allows you to be more proactive and have an intentional plan with your money. After assessing your income and bills make a allocated amount to be set aside for savings each paycheck, even if it’s just $20.

Put it in the budget as a regular expense, just like you do with your other urgent bills. For the most benefit open a separate savings account with a high interest rate so you are less tempted to spend it, and that money works harder for you.

Ensure You’re Not Spending More Than You’re Making

Most importantly, your household budget should keep you on track and prevent you from spending more than you’re making. And I don’t have to tell you that that’s pretty important for your financial well-being.

Debt does no one any favors, if you don’t have it then don’t spend it. If you already have debt it might be time to look into snowballing your debt and tackling it now.

How to Begin Your Household Budget

A phrase that works in many aspects of life is to K.I.S.S. Keep It Simple Silly! Just use pen and paper and sit down to do it.

Fancy spreadsheets will only make the process more complicated than it needs to be, and make you want to put it off. So just don’t, I switched to using a plan old notebook and pen and have a MUCH EASIER time keep track of our family finances and making our household budget.

So, go grab all your bills whether paper or on email and get comfy.

Write Income

On the top write “INCOME” in all caps and put your total family income for each paycheck. (whether weekly, fortnightly, or monthly)

Write Your Expenses

On your notebook Write “EXPENSES” in all capitals on one line. Underneath write each of the following, and their costs to the right. (ignore any that don’t apply to you)

  • Mortgage/Rent
  • Car Payment
  • Insurance
  • Electricity
  • Water/Sewer
  • Gas
  • Phone Bills
  • Yearly Registrations (car, drivers lics., etc)
  • Homeowners Association Fees

If you are not up for doing the math part a great Free website calculator that won’t require you to make an account or sign-up for anything is MoneySmart Budget Calculator. Still write it down on paper once you have it all calculated.

It is still much easier to pull out a notebook at any time, than motivate yourself to open your computer and open a certain spreadsheet.

Do You Have Extra?

Any extra income can be split between a bit of fun money and the other half needs to go into an emergency savings fund.

Life happens, and it can make all the difference whether or not you have an emergency fund that is separate and not easy to access for non-important spending.

Fun money is for date nights, ice creams with the kids when out and about, or saving up for that family holiday.

You Did It!

This is the very basics of getting a start on your household budget. Review it next month and see how you go. After 3 months see if your spending habits are staying the same, and also see how much you have been able to save!

Small amounts add up, so don’t think to little of small amounts you add to your savings over time. You just need to be consistent and have a plan so that those small amounts DO add up.

Happy Budgeting my friend! I look forward to hearing about your journey!

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