5 Simple Steps to Household Budgeting

Creating a household budget is essential to helping you stay on track to ensure you have enough money each month to pay your bills and even have money left over for unexpected expenses.  Creating a budget affords you the control you need to manage your finances effectively. Here are 5 simple steps to household budgeting that will help you master the basics.

Use the computer to create a spreadsheet that will hold all of your information. You will need to include your income, your monthly expenses, yearly expenses, and room for miscellaneous expenses. These would include vehicle repairs, school costs, going out to the movies, and other things along those lines.

1. Income

The first thing on your spreadsheet would be your income. You will want to include all your income including paychecks, secondary income, child support, bonuses, and other forms that may only come once a year, such as tax refunds or gifts.

2. Monthly Expenses

Monthly expenses are the next thing to add to your spreadsheet. These would include mortgage/rent payment, credit card payment, utility payment, loan payment, insurance premiums, etc. that occur on a monthly basis.  You will want to have monthly amounts and due dates so you can place these on your spreadsheet as a reminder.

3. Yearly Expenses

Yearly expenses might be a bit of a challenge to include, but it is a good idea to do it. This will help you avoid the stress of finding the funds to pay these annual bills that you might have forgotten. It is recommended you create a spreadsheet for each month for the entire year so you can include these types of expenses.

4. Extras (5 Simple Steps to Household Budgeting)

Extras are hard to budget for which is why you should create a space in your budget just for miscellaneous expenses.  Putting money into a savings account (emergency fund account) will better prepare you in having funds available when an emergency arise.  It is nearly impossible to plan for vehicle repairs or medical bills, so a savings account will help to ease the burden when these types of expenses occurs. You can plan on maintenance to your vehicle or yearly checkups with your doctor, but there are times when even those plan do not work,  so planning ahead will help.

5. Vacations

Planning a vacation becomes an easy activity now that you have a budget in place. As you allocate funds for recurring bills, any left over funds could go towards your vacation planning. Your savings account will help with this plan as well. First you will decide an set amount that you are willing to spend on vacation each year then divide that amount into 12 months. You can further divide that to sync with your paycheck, whether weekly or bi-weekly. As you stay committed and consistent with your budget you will be able to take that vacation without going into further debt.

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Bottom Line (5 Simple Steps to Household Budgeting )

Creating a budget will help you spend your money wisely and you will not forget any expense. It is nearly impossible to remember everything. Therefore you should create a spreadsheet that shows your expenses and income. You now have a clear understanding of what comes in and what goes out. This allows you to manage your budget effectively.  Soon you will be able to allocate funds into other accounts and start building your retirement nest.

Share with us. What other tips do you use when creating your household budget?

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Cheers!