Wednesday, June 29, 2011

Setting a Household Budget

The only way to really get your household finances in order is with a spreadsheet. You can set one up yourself if you have basic excel skills, here is a picture of a demo one I made to go with this post, not my actual finances don't worry. Excel also has templates you can use, one is set up specifically for household budgeting.
There are other programs available for keeping track of your spending if you fancy trying something else. Before you spend a load on special software just be aware that you can do a lot on Excel for free (if you have Microsoft Office on your computer - I am assuming you have access to a computer).

This information assumes you are paid monthly, just adjust it if you are paid at a different frequency. Your first task is to go through a couple of bank statements and work out some figures. You need to know the following information:

1. How much money is coming into the household each month?
2. How much do we owe?
3. What monthly expenses do we have (utilities, insurance and school fees, for example)?
4. What annual or quarterly expenses do we have? Add this all up and then divide it into your monthly budget. You can put this figure into your savings account monthly so that it is available when you need it.

Once you have ascertained the above information you should be able to work out how much money you have left to spend on the more variable household expenses such as supermarket shopping, entertainment and gifts. Once you have thoroughly gone through all your different areas of spending try to set a figure for each one. Once you have done this you may discover that you don't actually have the finances to cover your newly set figures. If this is the case, check your regular monthly expenditure and see if you can reduce in any areas. For example, scaling down your cable package or modifying your cell phone plan could save you a significant amount. If you get creative you will hopefully be able to cut everything down to the point where you have  a reasonable budget that you can stick to. Make sure you have put a savings pot into your budget. If you have no debt, this should go straight into your savings account at the end of the month. If you have debts to pay off, try to put the majority of this pot towards your debts. Look at your credit cards or loans and work out how much interest you are are paying, it may be a big chunk of your monthly outgoings if you are significantly in debt. You need to try to fix this as you are wasting money when you can not afford to do so. Look around to see if you have any other options and if you can find a way to pay less interest. I don't want to give you specific advice on this as I am not a financial expert. Do look into it and try to find an expert to help you if you feel you need to.

Try to be flexible for the first few months. If you did not set the gas budget high enough and need to fill up your car and yet you have spent only half of your gift budget, think about transferring money from one budget area to another. You must not go over your total budget because you can not afford to do so but allow the different areas of your budget some movement till they naturally settle at an acceptable and workable amount.
If you have a smart phone, an iPhone or an Android phone for example, check out the available apps for your bank. You can keep a very close eye on what you are spending if you have access to your bank account from your phone. Some banks will let you deposit a check by simply taking a photo of it with your phone.


  1. This is an incredible blog full of great ideas. Excel is a brilliant program as you can do so much with it and much cheaper than buying bookkeeping programs.

    We used it for our lawn mowing business.
    This is my other blog

  2. Thanks so much for the positive feedback!