How to Create a Simple Household Budget

Budgeting your finances shouldn't trigger unpleasant thoughts

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ne of the many responsibilities of any household is to track and manage one's finances.  The term 'budget' often stokes fear, boredom, or insecurity when in reality it should deliver motivation.


Managing your money starts with budgeting and once you discover where your paycheck is going, you can direct its future and start planning for so many opportunities. 

Below you will discover four easy and simple steps to kick start your household finances.  Let's begin!


List your Income & Expenses

At the top of your budget worksheet or piece of paper, list any & all income.  Income is your earned money from labor, work, or other means.  It is usually one's salary, paycheck, alimony, and sometimes child support. 



Next, List out every single item of debt & expense that is recurring and non-recurring.  Such debt may include credit card bills, consumer loans, mortgage or auto loans. 


Assign Percentages to Categories

Now that you have identified all expenses & debt, we need to organize and categorize these.


Organize into several categories such as:

  • Housing

  • Insurance

  • Utilities

  • Debt/Loans

  • Entertainment

  • Giving

  • Insurance

  • Savings

  • Professional Fees

  • Etc

Assign each category a percentage. For instance, if your total housing is $2,500 with HOA, insurance, etc, divide that amount by the total amount of expenses and debt and multiply by 100 to get a percentage. Example: $2,500 / $$6,300 (total debt & expenses ) = 0.3968 x 100 = 39.7%

Balance Budget to Zero


Assign every dollar of your income to a category ensuring your end balance totals $0.  Balancing to $0 is important because when a budget has a balance greater than $0, this displays inefficiencies of your money.  


A balance greater than zero means there is additional resources that you can put to work (earning you more money such as investing),  saving your money (emergency fund, savings account), or put towards paying off debt.  



If you have a negative balance, then you probably have more debt than your take-home pay. Review Paying Off Debt to learn how to take control of this and for assistance.


Review Regularly

At a minimum, you should sit with your spouse and discuss your budget.  How often should we review our budget?  The amount of time or how regularly you consider your budget really depends on your financial situation.  If you are paying off debt and do not have a good track record of sticking to your budget, I recommend weekly.  


If you are doing well with sticking to your budget and living within your means, then perhaps at a minimum, monthly.  Every situation is different, and you will need to determine what works best for your family.


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