Thursday, January 14, 2010

How to Create a Household Budget

Going straight from being my mom's daughter to my husband's wife and never having any time where I lived alone, I never had to figure out how to live on a budget or pay bills. I didn't even have a credit card until I got married and Lee said it would help our credit. The first five years of our marriage, Lee took 100% care of paying the bills and anytime he brought up money, bills, or budgeting I hate to admit that I turned a deaf ear. To me all of those words meant, "You can't spend any money." Well, instead I would just spend and Lee would figure it out.

After taking a couponing class last May, I was painfully aware of not only how little I paid attention to my grocery budget, but also how immature and selfish I had been to not really understand where our money was going. I decided to find a resource that would simplify budgeting and bill paying that Lee and I could go through together. Lee was thrilled that I was finally coming around to caring about our money.

The book I got was "Family Money Management God's Way." It was an easy guide that:
Focused on knowing what your priorities are for your money (ie tithing, savings)
Broke down into percentages where your money should be going (ie groceries, mortgage)
Provided wonderful worksheets to work out a household budget

One night we put Luke to bed, turned off the TV, and sat at the kitchen table with the book, extra sheets of paper, a calculator, and the laptop (to pull up account information). We spent a couple of hours, but I have to say it was actually interesting to see how much money we actually would have if we were more careful with our spending. That fell on me about 90% as I am the one who does the shopping, the cooking, and would pick up those random things (Lee is super disciplined with money).

I thought I would break down how to actually create a household budget.

Step 1 - Figure out your monthly gross income (before taxes, health insurance, and 401K taken out)
Step 2 - Figure out your monthly tithe (10% of your gross income) if that is a priority to you
Step 3 - Figure out your net spendable income (gross income minus tithe)
Step 4 - Figure out your monthly bills

Step 4 Broken Down

Housing -
Mortgage/Rent
Insurance
Taxes
Electricity
Telephone
Water, Sewage, Trash
Maintenance (ie pest control)
HOA Dues
Internet
Misc

Food (Grocery Store)

Auto -
Payments
Gas
Insurance
License Tag
Repairs/Maintanence
Misc

Insurance -
Life
Health

Debts

Entertainment/Recreation -
Dining Out
Entertainment
Babysitters
Trips/Vacations
Activities
Video Rentals
Misc

Clothing -

Savings

Investments -
401K
Misc

Medical Expenses

Miscellaneous -
Beauty/Barber
Dry Cleaning
Subscriptions
Gifts
Misc

Step 5 - Balance it all out
Step 6 - Assess what you see and make adjustments to variable expenses to match or be less than (hopefully) your income

I hope this helps! It helped us to break it down. The next step is in sticking to the budget. That is where the real fun begins! :)

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