How to Set up A Household Budget

Do you want to know how to set up a household budget?


basic-household-budgetSetting up a household budget is not as hard as many perceive. According to experts, the first thing to do is gather your monthly income. This includes job-based revenue, along with other monies that you make on a monthly basis. The latter can include interest on bank accounts, along with money earned from investments or business endeavors. Once you have an approximate number, you need to create a spreadsheet with your approximate monthly earnings. Programs like Excel have existing templates to determine monthly or annual household budgets. Next, you need to take into account all your monthly expenses. This can include groceries, electricity, utilities, credit card bills, and mortgage payments if applicable. No matter what your monthly expenses are, you need to include them on the household budgeting sheet.


The next step is to simply subtract your monthly expenses from your monthly earnings. For example if you make $3,000 a month and your expenses total $1,500, the remaining balance will be $1,500. You can then deposit this money back into the bank, or allocate it for any unseen expenses within the month. The key to any successful household budget is cost-savings. Depending on your income, you may have to curtail your household expenses per month. Due to the recent fiscal crisis, there are several people still struggling to make ends meet. As a result, most are living on fixed incomes, or are facing financial constraints across the board. One way to secure extra income, however, is by eliminating any unnecessary expenses per month.


The best way to do this is by subtracting non-essential expenses from essential expenses. For example you will need food, electricity, water, and gas for your loved ones and household. There are known as basic necessities, which simply cannot be curtailed or avoided. Non-essential expenses relate to entertainment, eating out, or excessive use of electricity. Therefore, instead of having the air conditioner run day and night, you can open your windows to secure proper airflow and distribution. This will lower monthly energy costs, which can result in savings and more money per month. You can also limit both television and computer use to a few hours per day. Cooking at home can also prevent eating out, which can really add up at the end of the month.


Even if you have a limited income after expenses, there are ways to make the most out of your household budget. For example you can purchase generic or standard grocery products, as opposed to high-end brand names. You can also use a water filter, instead of purchasing costly bottles per month.

Your Questions About Household Budgets That Work

Laura asks…

Anyone know a good book or ideas on budgeting your household checkbook?

I made over 100k last year and my wife blew threw it as quick as I made it…I worked over 500 hrs overtime! I need a budget that is practical. Does anyone know of a good book or ideas?

richmama answers:

To start a budget…it is very important to write down where the money is being spent so you can identify where you can cut down and save.

You can do this on a monthly basis or whatever suits your situation, list down your expenses as

fixed payments like rents or motgage payments, car loan payments, student loan payments.etc. These are expenses that you need to pay and which are fixed amounts

expenses that you can control like groceries, utilities, petrol , other basic necessities

The above expenses are the ones which you can’t avoid, though they are controlable.

Deduct the expenses from your income and you will see whether you have excess cash or you have a deficit.

If you have excess cash from the process above, you can start planning on what to do with the excess, it is a good idea to put away some as savings….but don’t forget to have fun too if you can afford it. You can’t just work and not have fun!

Use a credit card only for convenience, meaning charge your expenses but pay all the balance at the end of the month to avoid paying interests which are extremely high. If you can’t pay your credit card balance, it means that you spent beyond your means. The credit card statement serves as a list of your expenses which can help you keep track of your spending. It is very easy to forget how $100 in your pocket was spent, so make sure you write down everything. Quite hard at the beginning but very helpful!

Good luck…I am sure that when you do this, you will have a better understanding of where your money is going.

Robert asks…

Could you run a household budget this way, and not bankrupt yourself?

A Household‘s budget is based upon 40-per-week of income from the employed. The Employed decide that they wish to work fewer hours, but insist that since working less (taking in less revenue) doesn’t cost anything (other than lost income), that they can continue to live on a budget based on a 40-hour work week, but only if they did not add anything to their budget (no new spending).

Would this plan work in your house? Why do “conservatives” continue to believe that revenues (income) can be cut without corresponding cuts in the budget?

Do not bother answering with a question. It’s a waste of everyone’s time, including your own. Snide comments that do not answer the question are best left untyped, as well.

If “trickle-down” is being cited, please support with data what is being asserted. 30+ years of hard data, and real life experience, prove trickle-down an abject failure at doing what we were told that it would do.

richmama answers:

No You couldnt..

Fact of the matter is, we DONT believe “Why do “conservatives” continue to believe that revenues (income) can be cut without corresponding cuts in the budget?”…….quite the opposite

In the 1980’s we TRIPLED revenues to the Feds by cutting taxes, and the Dems spent every penny of it and then some. It was only after we dug our heels in 1995, was change made. Tax rates WERE higher, but still not at the record levels they were back 40 years ago.. One could say that REP’s proved that holding the line on budget spending was the cause of our record surpluses in the late 1990’s, and only after Congress decided to go on future spending binges, did we get back in trouble.

People dont seem to understand the concept that government should NOT run continual surpluses. If they are in surplus for more than a couple of years, then they are taking too much in taxes, and that tax should be given back to those that paid it..

Please dont try to rewrite history… It is all there in black and white…

Helen asks…

I have $ 2,500 to invest in cd’s. Where to invest?

I have been doing lots of work on my household budget, projecting income and expenses for the next 3 to 5 years. I am totally debt free including house, and have a big emergency fund, and have an ample amount of money in mutual funds and retirement funds.
I still have a minimum of $ 2,500 that I want to put into CD’s, probably a 1 year Cd. Where do I find the absolutely higher interest that I can put this money ? Search internet sites for best rate? Take whatever my local bank is offering on cd’s ?

richmama answers:

My stock broker is offering one 1 year cd that pays 5.2% as the highest offering. Most are quoted at 5%. 6 mo t-bills pay 5% currently. That will give you a benchmark to shoot for.

Mary asks…

Why do people on both sides believe economic myths?

Conservatives think cutting the deficit in a recession is a good idea (disaster, one of the things that started the Great Depression and made it come back in 1936). And they think that the stimulus hasn’t worked (wrong, latest estimate from the non-partisan Congressional Budget Office is that it saved 2.5 million jobs).

Liberals think that ending wars is good idea for the economy (wrong, war is an economic stimulus, WW II forex ended the Great Depression)

Why can’t people learn a little bit about Keynes and monetarism and realize that the economy doesn’t work like a household budget? All it really takes is a few hours of reading and thought to realize that most people have things backwards.

richmama answers:

I don’t care about the economy when it comes to ending war, I care about human life.

I agree that war can be good for an economy, but North Americans can manufacturing more than destruction.

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