14 Easy steps to creating a household budget

14 steps to creating a household budget

Nobody wants to find themselves in financial difficulties. That is why It is important that you create a household budget, so you do not overspend.  Household budgets are not easy and need to be realistic. Otherwise you will never stick to it.

Follow my 14 easy steps guide to creating a household budget.

Creating a household budget

Creating a household budget can be daunting for many people. You can reach your financial goals with these simple steps. I have created household budgets so many times that have not worked, but I did not give up. 

Even if we do not mean to have a household budget, we all do. Everybody has an idea in their head as to how much excess money they have each month. Even if they do not write it down.

Household budget to reach financial goals

The first step to create a household budget is to be clear what your end financial goal is. This is important as it will motivate you to keep within your household budget. Whether your goal is a dream holiday, clearing debt or to clear unexpected emergency expenditure. 

Always keep your goal in sight as gradually you will reap the benefits of your hard work.

To help encourage me to stick to my household budget, I have a photograph of our dream holiday. I also gave myself a realistic time scale in order to save for this holiday.

Be honest about your expenditure

This is the most important part of creating a household budget.  There is no point, creating a budget that is unrealistic. You don’t want to fail before you have even started.

Make sure you account for all small expenditure, whether this is pennies or just a few pounds. This will all make a difference.

Ask Your Family to be Involved

Don’t feel alone when you are creating the household budget. It does affect everybody who lives in your household.

Although I am a single mother, I have still involved my son when creating and tweaking our budget. Obviously he cannot have the final say, but it helps him to understand the value of money and the cost of living.

Discuss how you can reduce everyday outgoing expenditure, day trips and food. This may seem odd but it can be fun. 

When we go shopping together, we create a game as to who can find the cheapest food product to buy and test them. The winner can choose a treat for the following weekend. This may only be a bag of popcorn with a film at home, but we enjoy it.

Get Organised before you start your budget

Do not try to guess your expenditure, take your time as you will forget something. For me to gain a full picture of my monthly expenditure, I checked all of  bank statement and listed all of my financial spending over a 3-4 month period.

If you withdraw cash, ask yourself whether this for social expenditure.

Do you need a household budget spreadsheet

There are so many offers where you can receive a free spreadsheet. Some are very complicated and to be honest are not needed. You can easily create your own.

All you need is a notepad, pen and calculator. Keep it as simple as possible. There is no point over complicating it and confusing yourself.

How long does it take to create the perfect household budget

A good budget will not happen overnight. This may take several months and you will probably rework it until it is realistic and workable household budget.

This does not matter so long as you meet your goals.

What should your household budget include


List all of your monthly income after tax, national insurance, pension contribution or any other deductions from you monthly wages.

  • Monthly wages
  • Maintenance allowance
  • Child credit


Fixed Monthly Spending

  • Mortgage / rent
  • Gas / Electricity / Water
  • Rates
  • Home insurance
  • Life insurances
  • Loans (including car finance)
  • Car Insurance
  • Fixed contracts for TV / broadband
  • Mobile Phone Fees
  • TV Licence
  • Pet Insurances

Variable Monthly Spending

  • Fuel
  • Food
  • Pet Food
  • Personal care (Toiletries)
  • After school club fees 
  • Socialising
  • Credit card repayment

Potential spending

  • Car maintenance
  • House Maintenance
  • Vet bills
  • Clothes

You may have a few more but just add them to the list.

Round you bills up to include in you household budget

If you round your bills, at the end of the month you will find that you have a few extra pennies spare. You can either put this money aside, so that it is not in view. Stop the temptation to spend.

Once you have sufficient you can then treat yourself and your family.

Look to the future when creating you household budget

When you are creating your budget, look ahead. If you have children we are all aware of when we have to purchase school clothes. 

Think of trips you have planned, and make sure you include these in the socialising or clothing sections. There is no point skimping on details or not being honest with yourself.

Final stages of a household budget

The next stage is really easy. 

Total income less total Expenditure, is you basic workings for a budget. If you have sufficient income to cover your monthly expenditure that is good.

If you have found that your expenditure if not in sync with your income review you outgoings.

Track and check your bank statements

Always monitor your bank account, this for me was a way of double checking that nothing was being taken from my bank account that I had forgotten about. Or even an increase in a bill that I was not aware of.

Keep all of your receipts

Don’t groan at this one. This is a pain, but find a tub or a box, whenever you spend money place the receipt in the box.  

At the end of the month divided into essential or unnecessary expenditure. You will be surprised by the odd pounds here and there that you spend without realising.

Don’t give up on your first household budget

If you have found that the budget has not been possible to keep to. Try to understand why, don’t just give up. To start it will be difficult as you have got into the habit of spending and not worrying. 

If you are in a tight financial situation, keep in mind that this will not be forever. You are taking steps to reduce your financial pressure.

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1 Comment

  1. Alexandra Wogan

    I purchased the monthly budget plan book and I really like it. I wouldn’t have thought about getting something like this before so thank you x

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