How To Create A Household Budget

“Live below, not within, your means.”

Here is the cornerstone to financial independence.   Save more than you spend.  I know, this is easier said than done.  The best way to accomplish this is with a budget.  The following exercises will show you How To Create A Household Budget.

Track Monthly Expenses

For starters, track your monthly expenses on a piece of paper or the computer with a Microsoft Excel spreadsheet or a computer program like You Need A Budget.  You can start by keeping track of everything you spend money on in the next 30 days. Starting Now!!

I have done this several times over the last couple years & the biggest personal struggle for me was about halfway through the exercise as it can seem monotonous and repetitive. Keep at it.  Include rent, groceries, savings or charity, a night out with friends, etc. Track everything.  To make an accurate budget, you first need to know what you spend each month.

After tracking your typical monthly expenditures, see what can be cut or reduced.  See my Great Ways To Save Money for a few suggestions.  Maybe you can go without cable tv service for awhile or pack a lunch to work.  To become debt-free sooner, sacrifices will need to be made in other areas of life.

Other Items To Include In A Budget

There’s nothing worse than thinking you have all your money accounted for, but then that one curveball gets thrown.

Here are 3 of the most common things that you might not have included in the 30-day exercise:

*Emergency Fund– Save for a minimum of $1,000 but preferably 3 to 6 months living expenses.

**This money is for unexpected bills such as emergency dental procedure, fridge goes out, etc.

*Vacation – Perhaps you are going to the beach next summer.  NEVER pay for vacation from the emergency fund.

*Car replacement/repair fundIf you have extra income, set aside money for those expected or unexpected repairs to avoid drawing from the emergency fund.  Or if the wheels are about ready to fall off, use this fund for a down payment or ideally pay cash for your next vehicle & not have a monthly payment!

***For more budget categories, check out these recommended household budget percentages

Tips For Being Successful With Following Your Budget

Sticking to your budget is a challenge.  No lie.  Find a way to hold yourself to be accountable.

  • You can talk with friends or family & maybe they can talk about their budgeting with you.
  • Plan little celebrations when you achieve small but measurable goals each month.  If you can cut lots of spending cold turkey in a single month, good for you.  Adjusting to a cheaper lifestyle can require some adjustment & celebrating gradual progress can be a source of motivation for you as well.

Thank You For Reading This Page.  Please Feel Free To Leave A Comment for the Buffalo Herd as we blaze the trail towards Financial Freedom.

2 thoughts on “How To Create A Household Budget”

  1. Great post!

    Very Detailed and clear. “Sticking to your budget is a challenge. No lie.” This so true. I personally feel creating the budget is the easy part. The challenge is sticking to it. Having to tell self NO when I want to wiggled out of my budget be might be my biggest challenge at times.

    • Thank you Francis. Yes, telling yourself no is very hard. It’s one reason I never go inside a gas station. I almost always walk out with a cup of coffee, when I can be home or work in a few minutes & get the same thing for free.


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