Creating your Monthly Household Budget | 5 Steps to Getting Started

The end of the month is tomorrow – and … since we are inching up on November, don’t forget to write out your budget for next month.

Have you done your March Budget yet? I am doing mine this morning – I have papers ALL over my table. Combined with filing Taxes (Shop Amazon – TurboTax – Get 10% more on Top of Your Federal Refund) that should make for a really fun day.

Over the last few years, we have worked hard to keep our family on a written game plan and as a result, been able to pay over $60,000 in consumer debt. Having this written plan was incredibly necessary for us to see where our money was going – hold us accountable for our spending, and cut spending on areas we were wasting money in to make room for paying down OTHER areas.   It has not been an easy road.

Creating your monthly household budget is something that you need to do before the month begins …. it’s absolutely critical that you know where your money goes. And for most people .. that isn’t possible unless you write it down. There is something about writing it down that sets the gears in motion.

You may discover that you are spending much more than you realized; or you may be saving more than you knew.

Once you fine tune your budget, you will need to re-create it each month – sit down sometime during the last week of the month and spend an hour our two preparing for the next. Make sure you involve your spouse.. after all you both spend money.

Here are my steps for creating that monthly budget:

Start the Last Week of the Month for the Month Upcoming.  You can’t start the month without having your written budget done (at least I can’t!) I feel like I’m spending blind.

Calculate & note your monthly income.  Pull out your last paycheck and write down your earnings. If you are self employed, add your earnings for the last year & divide by 12. Make sure you include all forms of income (Child Support, money-earning hobbies, etc.)

Note all your Expenses.  Write down everything that you pay for – Rent, Mortgage, Food, Cable, Phone, Cell Phone, Pest Control, Home Alarm, Car Insurance, Investments (IRA), College Fund, and more. You might have to pull out your bank statements to remember everything you pay for – especially since many of us have our expenses drafted automatically.

Balance the Income & Outgoing.  Add up each and make sure you fill in anything you may have missed.  Then balance what you have – if you are spending more than what you are bringing in, you’ll need to determine how to cut what you are spending, OR find a way to bring in more income.  Usually it’s a little easier to cut from what you’re currently spending.   Once you set aside your required monthly outgoing (Electricity, Water, Cable – the recurring items), determine what is left – and assign every remaining dollar to a category.  

Determine Where you Can Cut Expenses.  If you opt to cut expenses over trying to earn additional income, you will want to take every area of your budget into consideration:

• Do you eat out at work? Try to stop doing that and bring your own lunch to save upwards of $10 per day (this was HUGE for us… )
• Bundle your cable with your internet – sometimes you can save when you bundle. OR, think of alternative ways to save (ie. Netflix, Hulu, and more).  
• Try Amazon Sling Service to eliminate your cable – it’s ONLY $20 per month (it might save you over $100 in cable!)
• Clip more coupons – set a cash grocery budget; envelope that cash per week and use that envelope to shop – ONLY use cash. You tend to spend less when you use cash versus plastic because you can actually see and feel the money as you spend it.
• Review your investments & insurance monthly to ensure you’re not being overcharged.  
• Try to plan your meals around items that are on sale – make 1-2 additional servings to allow yourself meals for work.
• ONLY pick up those items you NEED to survive each week… forget the extra items!
• Take Control of your Pantry – make Pantry Meals and shop for the necessities ONLY