How to do a household budget

Do you know how much money you spend each month? Do you have a budget to make sure you can really afford everything you buy? If the answer is 'no' read on to discover the many benefits of having a budget and how to start one.

October 17, 2024

If you live within a budget, you are more likely to:

  • Avoid excessive debt

  • Have money set aside for emergencies

  • Have savings accounts for things like holidays or a new car

Sticking to a budget isn't about depriving yourself of the things you need (or want!). It's about making sure you have enough for your financial commitments.  

You could start with using how often you get paid as the timeframe for your budget. For example, if you get paid weekly, set up a weekly budget.

So, how do you put together a personal or household budget?

Firstly, work out why you need a budget. It could be to stay on top of bills, save for emergencies, pay for your children's education, or save for a holiday or a house deposit.

Record your income

Track your spending over a week, fortnight, or month. If you don't have a regular income, work out an average amount.

Make a list of all the money coming in, including:

  • How much

  • Where it comes from

  • How often it lands in your bank account (for example, weekly, monthly or yearly)

Add up your household expenses

​​​​​​​Write down every dollar you spend (include cash and card purchases). A good way to do this is to keep or take a photo of every receipt you get.

This could include:

  • Rent or mortgage

  • Utility bills such as gas, water and electricity

  • Council rates

  • Food and groceries

  • Medical costs

  • Insurance, such as for your house, car, health

  • Transport costs such as car registration and servicing, or public transport

  • Family costs including childcare, school fees and sports/activities

  • Credit card payments 

  • Any additional loan repayments 

​​​​​​​To make sure you've recorded all your expenses, look at your bills or bank statements.  

Next, add up any unexpected expenses you've encountered over the past year, for example:

  • Car repairs and services

  • Medical bills

  • Extra school costs

  • Pet costs

Subtract your expenses from your income.

The money you have left after expenses is for 'wants'. Once you know how much money you have for 'wants', you can work out how much of it you'd like to save. What's left is your spending money.

Make a plan

Plan for what you want to do with your spending money. This will help you to keep within your limit. Keep track of your spending so you always know how much you've got left. 

Your budget needs to work for you and your lifestyle so it's important to adjust your budget as things change. 

For example, if your expenses start to increase you may need to reduce your spending, or change your savings goal. Or you might be able to save more if you get a pay rise or you pay off some debt.

Take a look at our Money Saving Tips for some quick and easy ways to save.

Source: moneysmart.gov.au
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