How to Develop a Household Budget for the New Year

Man calculating expenses, creating budgetIf you’re like many people, you probably start off the New Year with the best of intentions and set resolutions for yourself. Perhaps you want to eat healthier foods or work out more often, or you want to get a handle on your household spending. If the latter describes you, you are not alone.

According to Statistic Brain Research Institute, 34 percent of Americans who made a resolution in 2015 had one that was money-related. In fact, spending less and saving more was ranked as the third most popular resolution of 2015.

A great way to take control of your expenses is to create a household budget. Developing a budget is easier than you might think. You don’t have to be a financial expert.

Here are three simple ways to track your spending and gain control of your household budget.

  • Keep a list of all of your household income. Include all sources of the income, such as salary, wages, alimony, child support, financial income, and anything else.
  • Determine your fixed and variable monthly expenses. Expenses such as rent and mortgage payments are a fixed expense, meaning that they remain the same each month. Electricity and entertainment expenses, on the other hand, are variable expenses and change each month. When creating a budget, you’ll need to determine a monthly average, based on one year, of your variable expenses.
  • Total your monthly expenses, both fixed and variable, and then subtract that total from your total monthly income. If your income is greater than your expenses, you can apply the excess toward your financial goals, such as paying off your credit card balance or putting into savings. If your expenses are larger than your income, decide which expenses can be reduced and/or eliminated.

Want some more help in creating a household budget? A number of free budget planning tools are available online, such as the following:

  • EARN, a national nonprofit organization, offers a suite of resources to help people get on track with their finances, via its website.
  • Microsoft Office has a variety of free budgeting worksheets available for use in Microsoft Excel. Check out these budgeting templates here.
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Categories: Saving Money
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