How to Create a Simple Home Budget

Written By Scott Kessman
Last updated September 1, 2021

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Personal Finance
September 1, 2021

Simple. Thrifty. Living.

Managing your finances and running a household are two very time-consuming, interconnected tasks. Sometimes, you might find yourself a bit short on money one month due to an unexpected home repair. Or you might not fully realize how much you are spending each month on utilities because you haven’t really taken the time to study the bills. But by creating a simple home budget, you can be much better organized in your finances and your home.

Making a budget doesn’t have to be a difficult or time-consuming task. One afternoon to get your bills and bank statements together and perform a few calculations can give you a clear picture of your monthly expenses. This will help you put together a simple home budget that can enable you to better manage your home expenses.

First, decide if your preference is for computer-based spreadsheets or you would rather put everything down with pen and paper. You can find an assortment of simple home budget spreadsheet tools available online, but there’s nothing wrong with doing it the old-fashioned way either. Just take care to watch for mistakes with your calculations. An electronic budgeting tool can be much more accurate and allows for easier and quicker adjustments of the numbers.

This will be the first number going into your budget worksheet. In addition to your monthly wages from your occupation, you can also include other sources of income. For example, you might receive alimony or child support, regular disbursements from investments, etc. As long as it is a steady, reliable source of monthly income, you can add it to your total.

If you make income from contract or freelance work that fluctuates, then determine the average monthly income based on the last six months. You’ll need to do some additional calculations if your income from this type of work is seasonal.

It isn’t going to be fun tallying up your monthly expenses. But it can certainly be a real eye-opener when you’ve got all the amounts down in one place. Start with your fixed monthly expenses, such as mortgage or rent, insurance, utility bills, phone service bills, lawn care treatments, etc. Don’t forget the little things, such as cable channel subscriptions, newspaper or magazine subscriptions, and even charges for cloud storage.

For expenses that fluctuate, such as groceries, gas, or transportations costs, you’ll need your bank statements for the last few months. Add up how much you’ve spent on each expense over the last six months and come up with an average. Don’t include items that are unnecessary expenses as of yet, such as dining out. Figuring discretionary spending into your simple home budget comes later.

Total up all your monthly expenses and subtract the total from your monthly income. What you have left is your net income. If this is a negative number, then you are spending more than you are making each month. You will definitely need to figure out where you can eliminate some expenses or you may start falling behind on bills or using your credit cards more. This will ultimately lead to more debt, which you don’t want.

If the number is positive but not very big, then you still have too many expenses. You are likely living paycheck to paycheck. Where you can change things? Are there some subscriptions or monthly services you don’t really need? Can you spend less on groceries? Maybe you can switch to a cheaper phone plan. There are usually plenty of things you can do that can add up to larger savings.

If the number is a large positive number, great! You can use the extra income for discretionary spending and saving.

How much do you spend on things for the home? Maybe some new curtains one week, new bedding another week, or some garden tools in the spring. If you’ve got money left over in your simple home budget, you can likely handle these random costs. But make sure to keep track of what you spend, because it can add up quickly. You don’t want to go out and purchase some home décor items and then find you don’t have enough left to pay a utility bill.

As part of your simple home budget, you can allocate some of your net income to go toward discretionary spending for the home. And, if you wind up not spending it all one month, you can save it in an envelope and carry it over to the next month. Because one day you might need to make a larger purchase, such as a new sink faucet or a lawnmower. Having the money already set aside ensures you don’t mess up your regular monthly budget with a larger purchase.

It would be great if everything in your home always worked perfectly. Unfortunately, this is never the case. You’ll always unexpectedly need to repair or replace something in the home. It could be something as inexpensive as a lightbulb or something much more expensive, such as your HVAC unit.

If you have enough net income to start an emergency savings fund, then definitely do it. Allocate a certain amount each month to put toward a fund for home repairs, and you’ll be better prepared financially when the unexpected does happen.

Your home is going to be the most expensive and important financial investment you ever make. As such, it is important to create a simple home budget that focuses on all expenses related to the home. Then, you can use any extra net income for discretionary spending, such as dining out or going to a concert.

Just remember to get into the habit of always tracking all your spending. This ensures that your monthly budget is always organized and that you are aware of what you have left to spend. Doing so helps reduce the chances of accruing credit card debt or missing a bill payment. Stick to your budget, and you’ll have peace of mind that all your home expenses will be taken care of month after month.

About the Author

Scott Kessman

I possess a strong 20-year background in marketing, digital marketing, and advertising. However, writing has always been a true passion of mine, and after working in corporate offices for many years, I turned my passion for writing into a full-time job. As a contract content writer for the last 12 years, I can craft engaging and informative content about a wide variety of subjects. I have also written and published two fantasy novels and a collection of short stories.

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