How to create a budget

A household budget can really help you manage your money and be a better saver. Making a budget is simpler than you might think — just follow these steps, and use our household Budget Template to make it even easier.

Step 1: Add up all the money coming in

List all of the money you and your spouse or partner have coming in. This can include money from:

• Full- or part-time work
• Disability payments
• Employment insurance or other government benefits
• Spousal or child support
• Interest from a savings account or investment earnings

Add up the total (our Budget Template tallies it automatically). This is your monthly household income.

Step 2: Add up your expenses

List all your expenses for a typical month, dividing them into major categories.

If you have trouble defining your expenses, review statements and keep receipts for everything you spend, including automatic bill payments, for a few months.

Remember to account for occasional expenses, such as vacations (take the typical annual amount you spend on trips and divide that number by 12 to get a monthly average). Your spending categories might include:

• Rent or mortgage payments
• Property taxes
• Utilities (water, electricity, heating costs)
• Communication fees (phone, cell phone, Internet connection, television)
• Groceries and household items
• Daycare
• Credit card and other debt repayments
• Transportation
• Medical expenses
• Personal care (clothing, grooming products and services)
• Entertainment (restaurants, movies, shows, music, etc.)
• Vacations
• Gifts
• Charitable contributions

Add up the subtotals for each category, and the total of all expenses. (Our Budget Template provides the totals automatically.)

Step 3: Calculate your balance

Your magic number comes from subtracting your estimated monthly expenses from your household income.

A positive balance means you will have money left over to save for future needs. Be sure to put this money aside, to cover months when expenses are higher or income is lower.

If the balance is negative, you need to rethink your spending or consider ways to increase your income. This is how your budget becomes not merely an exercise, but a powerful financial management tool. By looking at where your money is going — and where you want it to go — you can use your budget to help control your finances.

Step 4: Revisit your budget regularly

Your expenses will likely vary from month to month, especially if you’re a homeowner or have children. Revisit your budget regularly — every six months, for example — and compare what you thought you’d spend to what you’re actually spending .

By checking in regularly and monitoring progress, you’ll keep your budget effective and relevant to your savings goals, making it easy to see the positive difference it makes to your everyday finances.

Learn how to make a household budget and use it to monitor expenses and save money.