How to Set up a Household Budget
Step 1: Determine your monthly income after taxes.
While this step is simple, it provides a firm number that will drive your expenditures.
Step 2: Make a list of fixed expenses:
- Mortgage, rent, homeowner association fees
- Utilities (gas, electric, water, and internet)
- Insurances (home, auto, health)
- Transportation (car payments, fuel, inspections, registrations, parking, public transportation fees)
- Medical (medications, vitamins, doctor visits, tests, pet trips to the vet, and pet meds)
- Taxes (county, borough, school, tax prep fees)
- Professional membership fees
- Credit card balances
- Student loan payments
- Alimony and/or child support
Step 3: Make a list of variable expenses:
- Savings, including a separate emergency fund
- Groceries (including pet food, litter, cage/aquarium liner, treats)
- Auto and home repairs (your budget should expect the unexpected)
- Charitable donations
- School supplies and photos
- Cell phone and streaming fees
- Entertainment and recreation (holiday dinners/celebrations, gifts, greeting cards)
- Big-ticket items (computer, phone, or TV upgrade; a vacation; a car or house down payment;
home improvements; future education expenses; a wedding)
If you need help figuring out where your money is going, give our Money Management tool in Online Banking a try! You can add all of your accounts — student loans, credit cards, other financial institution accounts — and view your complete financial picture all in one place. From there, you can set up a budget based on your spending categories, set savings goals, retirement goals, and more.
Step 4: Get buy-in from “the team.”A household budget will only be successful if it’s a household effort. Married couples will most likely share all expenses, while couples who aren’t married may assign financial responsibilities differently. Assigning balanced responsibility based on the amount of total earnings is a fair way to divide payments. Opening a new joint checking account for shared expenses can also work for couples who aren’t married.
Be sure to include the kids, even if they’re too young to be spending. Teaching children to budget is one of
the most important lessons they’ll learn. It teaches financial responsibility and self-discipline. Explaining your objectives early on will help them understand why they may have to choose between two more in-game skins or
the new season pass this month. If you want to learn more about topics, strategies, and best practices for having family conversations about money, check out this short, interactive lesson in our Financial Education Center.
Step 5: Re-evaluate.This is a tedious step, but it’s simple addition and subtraction.
Addition: Look for ways to make more money.
- Pick-up a side gig
- Start a blog or publish an ebook
- Sell unwanted items or crafts online
- Downsize, if it’s an option, for big results
- Shop for better insurance and utility rates
- Skip the drinks and dessert when dining out
- Bank your coins
- Consider debt consolidation
Step 6: Stick to it.Track your expenses as you spend, so mid-course corrections can be made. Checking at the end of the month is too late to fix overspending. Just as importantly, be patient with yourself. A study by Phillippa Lally, a health psychology researcher at the University College of London, says it takes an average of 66 days to create a new habit.
The key to all of this is to avoid impulse buying. The “gotta have it” item that seemed like a great idea at 1:00 a.m. can blow your budget for the month, just like an extra cake serving can blow your calorie count for the day. Try adding items to an online cart or pushing them into a “save for later” list, then wait for two weeks to see if you still want to order them. This kind of discipline helps you stay focused on what you really want.
Lastly, enjoy the power of being in control of your finances. When you’re on vacation, receiving your diploma, or enjoying your new TV, you can proudly say, “I made this happen!”