Starting a household budget doesn’t have to be a difficult thing to do. It may seem overwhelming at first, but in reality, it is what you make of it. You have to remember that it is intended to help you reach your goals – not make life miserable. When creating a household budget, make sure that it is something you want.
But now, you are probably wondering how to go about it? What does it take to set up a household budget and what does it look like? These are great questions to ask. If you are part of a young family, you have to remember that it is great that you are asking these questions. It may seem like you don’t know anything, but it really shows that you are being intentional at a young age. This is great news.
How to Set up a Household Budget
The first thing you need to do to set up a household budget is to record all of your expenses. This may seem overwhelming at first, but there are many ways to accomplish this without too much effort. While I will discuss the best way to track your expenses another time, there are many great tools to do so. You can use your credit card statements as one option. This is the option that I use, but you should only do this if you can verify the transactions. Otherwise, it’s like trusting someone else to take care of tracking your expenses. It will be right most of the time, but you’ll never know when there is a mistake.
After you get an understanding of where you are spending your money, take time and group these expenses together. Housing, food, transportation, etc. Grouping these expenses together will help you understand where you are spending your money, and most importantly, where you can cut back. An important lesson in budgeting is that it isn’t just a recording tool. It doesn’t just react to your spending. It should be something that limits your spending as well. Understanding where you spend your money, and perhaps where you are spending too much of your money, is the only way that you will accomplish the task of restricting yourself.
Once you understand where you are spending your money, set up a spreadsheet with these items and set limits for yourself. You can try to be aggressive as possible, but remember that a successful household budget is one that lasts a long time. You don’t want to push yourself to the point where you want to give up. You want to make it something that you enjoy and because of that, you should also consider rewarding yourself for working towards your goal. In other words, if you goal is to cut your grocery bill by $100, tell yourself that you will do something in return for achieving this goal. It should be less than the $100 you saved, but make sure it means something to you in order to both motivate yourself and keep it enjoyable.
The last part of setting up a household budget is just refining it over time. A budget should not be something that is fixed or static. Instead, it should change to fit your needs. Don’t let someone else create your budget for you – it has to be personal to your needs. Otherwise, you won’t follow through.