Household Budgeting Guide

What Is a Household Budget?

A household budget is a plan that tracks all the income and expenses for your household to make sure that you’re not spending more money than you earn. A home budget should include all joint expenses that are shared among couples or roommates, and it can help you plan out how to save for any household financial goals.

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How to Make a Household Budget

To make a home budget, you will need to start by adding up your income and listing your household expenses. Then choose a budgeting strategy to follow and input your expenses and income into a budget spreadsheet or app to crunch the numbers. We’ll run down the steps in detail below.

1. List all shared household expenses.

Talk with your family members or roommates to find out which shared household expenses each of you is paying each month. You should all review your bank statements and credit card bills to see exactly how much you are spending and on what.

Some common household expenses include:

• Rent or mortgage payment
• Utilities
• Groceries
• Gas
• Entertainment
• Child care
• School supplies for kids

Don’t forget to also list any money set aside for shared financial goals. For a family, that may include money being put into a college fund, for example. Roommates may have more short-term shared goals, such as saving money for a weekend trip together or a new TV in the living room.

2. Figure out your household income.

Add up all the sources of income for everyone living in your home. This should include all of your paychecks and other sources of income, such as alimony or Social Security. Use the average of the income for the past three to six months if it changes every month. This step is not necessary if you are living with roommates rather than family.

3. Choose a budgeting strategy.

A budgeting strategy can help you organize your expenses and come up with a way to allocate your money. Below is a list of some popular strategies you might want to try.

50/30/20: Your paycheck after taxes is split into three separate categories: 50% for needs, 30% for wants, and 20% for savings.

Zero-Based Budgeting: You subtract expenses from your income until every dollar of your income is accounted for. After you’ve subtracted all your expenses from your income, it should always equal zero.

Envelope Budgeting: You use digital or physical envelopes to categorize your expenses. Once all the money in one envelope has been used up, you can’t spend any more money in that category for the month.

Pay-Yourself-First Budgeting: Every time you get paid, you set money aside for savings before you pay any other expenses.

Learn more about popular budgeting strategies.

4. Choose a budgeting tool.

Budgeting tools, like Microsoft Office and Google Sheets, offer templates that can help you create a budget spreadsheet that you can share with everyone in the house. There are also budget apps that allow you to create a budget right on your phone.

Some budget apps, such as the WalletHub app, can make budgeting easier and less time consuming since these apps let you automatically sync your financial accounts. These apps can automatically track your expenses, so you don’t have to do it manually.

5. Review and adjust your budget as a household.

Schedule time weekly or monthly with everyone in the household to review the budget. Checking in regularly allows you to see if you are staying within your household budget and not spending more than your income. If you are going over your income, get everyone’s input on what expenses can be cut out or reduced. Reviewing your budget also allows you to do things like update your income if it has changed or account for any new household expenses.

More Household Budgeting Tips

Use apps that offer shared access

Apps like Zeta and YNAB, let users share one account with multiple people. This gives everyone in your household easy access to the budget so everyone can stay on the same page.

Hold everyone accountable

A budget will work only if everyone in the household sticks to the budget. Have everyone sit down and review the budget together, so everyone knows what is expected of them to stay within the budget and reach financial goals.

Automate your savings

Have funds automatically transfer from your checking account into your savings every time you get paid. It’s one less thing you’ll have to remember to do each month, and it helps you build an emergency fund for unexpected expenses that may come up in the household, such as an expensive home repair bill.

Avoid impulse buys

Impulse buys are unplanned expenses you don’t need that can negatively affect your budget. These types of purchases can lead to overspending, possible debt and an inability to save money for future financial goals. Some ways to avoid impulse buys include giving yourself a waiting period before buying an unnecessary item or not saving your credit card information on online shops that you frequent.

Check out more budgeting tips.

Home Budgeting vs. Individual Budgeting

The main difference between a home budget and an individual budget is that an individual budget includes expenses for one person, while a home budget includes expenses for the whole household. Home and individual budgeting can overlap, though, especially if someone lives by themselves. For example, someone living by themselves can create a personal budget that will also be their household budget.

Differences Between Home and Individual Budgets

• Expenses: A personal budget will include personal items expenses, such as clothes, haircuts, and work lunches just for yourself, while household budgets include shared expenses, like rent, utilities, and insurance if it’s a shared policy.
• Financial decisions: There’s only one person who gets a say in a personal budget, but with a household budget, everyone should get input on how much money is spent on shared expenses.
• Responsibility: With a personal budget, you are solely responsible for staying within budget. But with a household budget, everyone has to work together.

Even though home and individual budgets are slightly different, they both serve the same purpose. They both let you manage and track expenses, as well as help you build a plan to achieve financial goals.