Home Budgeting

Have you been talking about home budgeting, but aren’t sure where to start? Try starting with an outline for home budgeting and the categories you want to include. Here are some tips to help you begin living on a budget.

Income – How Much Money Comes Into The Household?

The first place to start is with an outline of your budget is with your income. There will be some estimating here, no doubt; but make sure it’s estimation, not dreaming. The income area of home budgeting is not the place to write down what  and how much income you are bringing in to the household.

Simply take a look at your net income over the last three months and estimate an average monthly income. Or you might have income that changes very little month-to-month; it should therefore be easy to figure out your monthly income. Knowing what your income is will help you when it comes to living on a budget once you get the home budget worked out.

Expenses – What Do You Spend Your Money On?

Your next category should be expenses. It’s good to include enough details you can about your expenses, but splitting your expenses into dozens of categories will probably only frustrate you.

Try to make your categories fairy general – “entertainment,” for example, is a more general category than “computer games, movies, cable, and DVDs” listed as separate categories. There will probably be more estimation here than in the income category.

As you break down your expenses for your home budget into understandable categories and numbers, remember that charitable giving or any giving away of money should be also listed as an expense.

Actual Expenses – How Much Money Goes for Expenses?

Estimation gives way to “real” numbers when you write down your actual expenses during the month. This is the last section of your home budgeting plan. Keep a running tally of your expenses for several months, and then look at where you are. Get a notebook (you could do this on the computer as well) and start listing all of your expenses.

• Mortgage/Rent
• Car Payment
• Car Insurance
• Electric
• Water
• Food

List everything you spend money on and you will see where the majority of your money goes… This is the beauty of home budgeting. You could go as far as adding your savings account to the list above if you are serious about saving money in the future. You Could make saving money on a monthly basis a need instead of a want.

Some Basic Principles – The Difference Between Want and Need

In home budgeting, there are some principles that are considered basic. Here are some of them.

• Decide between wants and needs. This can be a hard one, but it’s important for  home budgeting to work correctly. Be careful not to convince yourself that a want is a need when it isn’t – you may just be trying to find an excuse to buy something you really don’t need. Real needs are:
  • clothes
  • food
  • shelter

However, designer clothes, gourmet food, and a palatial dwelling are more like wants!

• Expenses should not exceed income. You may find yourself surprised the first time you do home budgeting and discover that you actually don’t make enough money to cover your expenses. If you discover this, you need to look carefully at your income section and see where you can increase it, and look just as carefully at the expenses and see where you can make cuts. You could also read 10 budget Tips.

So, sit down with paper and pen and write everything down (write it out the first time as fast as you can write!) and see where your money is going, and if there is anything left at the end of the month.

Do this for several months and if you don’t forget anything, you may be ready to start saving money, because even that will go into your budget.

But, do start out with a simple home budgeting plan so you don’t run into the frustration that a lot of us feel when home budgeting is mentioned.