How to Create a Household Budget

At Apprisen/CCCS, we see thousands of people who are in money trouble. The reasons for their problems are varied, but the most common is the failure to follow a budget. Many problems could have been avoided if people would have planned ahead and had a plan for their finances.

Simply put, a budget is your household spending plan, and your plan should account for 100% of the income coming into your household. It is not enough to say “I pay my bills and can do whatever I want with the rest.” You need to set financial goals and plan for them accordingly.

Here is how to get started.

• Find a budget form you like. You can find examples in personal finance books at the library, online at many financial web sites, or online at our web site. This will be your primary budgeting tool. You want a form you can understand and work with.
• Record all sources of income. Make sure you use your net income, the amount you take home after all deductions are made. Include disability, pensions, child support or any other source that you receive on a regular basis. Do not use overtime or bonuses as part of your monthly income, but instead, put that in savings or pay down your debt.
• Track expenses for one month. You must track all expenses. Where are you nickel and diming yourself? Most people are surprised on what they spend on certain items over the course of a month. Access our Fritter Finder for help!
• Set your goals. What are your short, medium, and long term goals? Getting out of debt? College education? Retirement? Use our goal worksheet to help you determine how much you need to save to reach your financial goals.
• Create a plan. Decide on what you need vs. what you want and then prioritize those expenses.  It is most important to set limits on what you are spending for food and entertainment.
• Review your budget frequently. We recommend a monthly budget review. This will help you determine what is working and what is not.

Make sure your goals are realistic and not set so high that you cannot attain them. The most important thing is finding a budget that works for you and sticking to it.