How to Create a Household Budget

With the cost of everyday living necessities constantly on the rise, the importance of establishing a healthy household budget is an essential aspect of any financial plan. While there are a myriad of tips relating to creating a household budget, the following are essential elements any healthy budget features.

Step 1: Identify Bills and Regular Expenditures

In order to determine what your budget should be, and where it is currently, monitor where your money is going for two weeks. On a notepad, or on your smartphone, write down the exact amount you spend each day along with a detailed description as to what the money went to.

This method allows you to not only identify your major bills, but also small expenditures that over time can add up to a substantial sum of money.

Step 2: Create an Income Spreadsheet

While knowing where your money is going is important, understanding exactly how much money you receive each month is an important aspect of establishing a budget. Without knowing how much income you make it’s essentially impossible to create a sturdy budget. See how to make an income spreadsheet here.

Step 3: Identify How Much You Wish to Save

Having a budget only works if you understand what you’re saving for. While you may wish to simply grow your savings account, set specific saving goals to assist in carving out your daily, weekly and monthly budget according to  For example, if you wish to have $2,000 in your savings account within the next four months, then you have a tangible number to work with regarding how much you must save per paycheck.

Step 4: Create a Daily Budget

Once you’ve identified all of the aforementioned elements, it’s time to create a daily budget. Once this budget is created, the hard part comes – sticking to this budget. While some may be disciplined enough to never spend more than what’s allotted, most consumers are unable to do this. Therefore, simplify this process by creating seven envelopes (see Frugal Living). On each envelope write the day of the week.

Place the amount of money you can spend for that day within the envelope. Spending with cash is far more effective than spending with debit cards because once the envelope is empty, you can’t spend more. This is among the most effective ways to stick with your budget as you must make a conscious decision to take money from other envelopes. The best part, if you have money left over, you can either put that into your savings account or apply it to another day of the week.


How to Save Money When You’re Broke

One of the biggest mistakes you can make for your financial future is refusing to save as you feel you’re too broke. While having limited financial resources is a reality for millions of Americans, there is always a way to save. The first step to accomplishing this goal is realizing even putting $5 into a savings account every paycheck is growing your savings. Once you’ve eliminated the thought process that the only way to save is by putting away hundreds of dollars, you’ll soon be on your way to growing your financial security.

Realize Saving Money Is Long-Term

The biggest mistake that will derail your savings account is the thought that you must have a large savings account immediately to have any benefit. This is the biggest mistake you can make. Realize that saving money and growing your nest egg is a long-term prospect. When you realize that you have your entire life to build your savings, you take the pressure of putting large chunks of your money away into a separate account, which causes many individuals to not even begin saving. See how you can save money fast!

Eat Cheap

Did you know that the bulk of an individuals paycheck goes toward food? If you’re a person who enjoys going out to eat, you must make a sacrifice. Instead of having a restaurant make you a meal for $15, you could take that same amount of money and create four to five separate meals. If you’re broke, the best way to save money is to eliminate going to restaurants and start preparing your own food. While cooking might not be your strong suit, it’s among the most effective ways to save money when working with a serious budget.

Live Below Your Means

When you’re pulling in a low paycheck, this may seem almost impossible; however, there are always methods of reducing your expenditures. For example, instead of going to purchase a new pair of jeans, check out thrift stores and consignment shops. Becoming a master at frugal living not only grows your bank account, but also provides a sense of satisfaction as there are many ways to enjoy the same amenities and entertainment options without spending the same amount of money on them.

Seek Out Additional Employment

While this may seem like a no-brainer, if you’re living paycheck-to-paycheck and wish to expand your savings account, then you should consider getting an extra job. Even if you only work one or two extra days a week, this small boost in income can be paramount in your ability to save money. You can find other tips and tricks at Your 650 Score.