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Creating a Household Budget to Last You the Year

Updated on January 8, 2013

Budget Planning

Have you ever tried to set a budget for a year or may be just for 6 months? Many people who have tried have been shocked to see where their money was going unnecessarily.

Budget planning though sounds difficult to set, once set can be very rewarding. It can help you to achieve your goals of saving certain amount by tracking your unnecessary spending.

Why plan your Budget

Budget planning lets you see the realistic or actual picture of your expenditure. It opens your eyes to see what and where are you are spending that is affecting your overall budget. I am not talking about spending money on coffee everyday, because I myself cannot live without it, but your money is spend in many different ways such as on takeaways, unnecessary buying and throwing, unnecessary items or cloths or shoes that you never wear. Budget planning helps you to control spending money on things that you don’t need at all. It is a financial plan you can make for your family to survive for a whole year without any stress.

There is no doubt that you need to spend some money for luxury as well and for this budget planning will help. How? Because as you plan your budget and avoid those unnecessary expenses, you will be able to save money that can be used for your luxury spending such as spending for holiday, or buying a gift for yourself. Budget planning is not just about saving, it is about spending for the right purpose.

No no. Budget planning doesn't have to be stiff. It can rather be a flexible way to keep track of your finances. As you check your budget every month, you will have the chance to fit more spending or save more for coming months.

It is actually quite satisfying to see how your family is tracking financially and how you are on control of your finances. Budget planning really works if you use them correctly. Make your planning in the monthly basis because there can be different requirements each month and you can track beforehand if you are going to face any challenges in the coming months.

Have I convinced you to start making a budget for your family now? Below I will share with you steps that you need to follow to create a family budget for a year on the monthly basis. Following will be the the sample of a Budget planning spreadsheet:


Creating a home budget for a year on a monthly basis step-by-step

Step 1- Write down your income: Get a pencil, rural and paper and make 13 boxes, where first box will be for income and others for what you will earn each month. In first box write down what your family income is. Include all the earnings such as salaries, bonuses, family benefit payments, childcare payments, pensions, interest earned from your bank accounts. On the following section write your income for each month. Make sure you only record the earnings after tax, because that is your real income. What goes to tax office is not your money. This is the best part of making a spreadsheet as you will be happy to see what you will be earning for a year in numbers. Total your income in the last row.

Tips to remember while setting Budget Plan

  • Don't cut everything you enjoy, rather just spend half on those unnecessary expenses. For instance, if you go for movie every week, try going on alternative weeks.
  • Make your planning on the monthly basis so that you can foresee the challenges that might occur on coming months and adjust your expenses accordingly.
  • Try to be as detailed as possible while adding your expenses and income so that your planning is accurate as possible.
  • Be honest while planning your budget- that means write down what you "actually" earn and what you "actually" spend.
  • Don't make your plan too tight to avoid discouragement - be real.

Write down your expenses

Step 2: In a box write down your expenses starting from major expenses which may include water bills, electricity bills, gas bills, council bills, car loan payments, rent or mortgage payments, strata fees, any insurance, credit card payments, transport expenses, grocery, pets expenses, education expenses.Track back on your expenses from last year's bill or from bank statement. Divide your expenses into "Necessary" and "Other" section. Use a calculator to multiply your daily or weekly spending to monthly basis and write down how much money you will be spending in coming months. That way it is easy to match income and outcome on the monthly basis.

Then in the following lines, write down your "Other" daily or weekly spending such as buying lunch, daily coffee, dining out, newspaper, dvds, clothing, holidays, cable television and write down on numbers how much money you spend on them each month. If you have receipt from last time, that will be of great help, but if not try noting down your spending in approximate.

Subtract your earning with your spending

Step 3: Use a calculator and add all of your earnings on the end of "Total Earnings" boxes and add all of your total spending on the "Total Spending" boxes. Minus your earning with your spending for each month. Are you saving some money? Are you way behind with saving. If you have not been saving and want to save, or if you want to cut the unnecessary expenses it is time to make plans to save money.

Table containing income

benefits from government
Interest from saving
Family Benefits
Child care benefits
Total income
Minus total expense (Subtract total income with total expenses once you have recorded the total expenses)

Table containing Expenses

Necessary Expenses
Water bill
Electricity bill
Gas bill
Grocery bill
Child care fees
Car insurance
Car loan repayment
Train tickets
Credit card payments
Other Expenses
Dining Out
Takeaway meals and coffee
Dry cleaning
Newspaper and Magazines
clothing and footwear
Cable TV
Christmas gifts
Total Expenses
Try to add as many expenses as possible in this table

Keep it visible

Step 4: Hang this chart in a place where everyone in your family can see. Share your plan with your family and work together to find the alternative ways for saving. This way you can be able to achieve your goals that you may have set, such as saving 10,000 at the end of year for the mortgage.

How did you save money last year

See results

Planning to save money

Step 5: Use a separate sheet and write down how you can decrease those unnecessary expenses and how much can you save that way. And make a total of approximate amount of money you can save by decreasing spending on some of your regular unnecessary expenses.

Think practically on how you can save some money. Should you sell the unnecessary items? (we have old car and we aren't using anymore. My goal is to sell it this month before it is due for next registration, because that will be waste of money for a car that I am not using). Going to cinema regularly, dining outside etc. will add up to your expenses. Buy expensive things when they are on discount.

Try to reduce on your entertainment or luxury expenses but don't cut them completely because you will end up blaming your budget for your boring life. Rather you will be discouraged to plan a budget if you cut off everything.

How to save Money

Ways to save money
Approximate Savings for a Month
Approximate saving for a year
Sell unneeded car
Will get some money for shavings account and don't have to do the registration again
Take lunch from home twice a week
Taking lunch from home can save lots of money and you can save your health too that will save you for long term
Don't go for grocery shopping when hungry
When hungry we tend to buy unnecessary junk unheatlhy stuff
Don't take kids for shopping every week- take once a month
Kids do love eat treats while they go for shopping. Thanks to supermarkets that have chocolates and chips everywhere hanging to attract kids
Borrow books and DVds from library
Why not enjoy free entertainmnet
Remove cable TV
Who has time to watch TV. And by the way everything is available via internet now
Walk to nearest place such as parks instead of using car
saving here again- both short term and long term
Total savings
You can have various ways to save money

So these are some of the ideas you can follow to create a home budget. You don’t have to do it the way I have done it. You can make your budget in your own way. If your monthly earnings and expenses doesn't change, divide your table for summer and winter months if it is easy for you that away, but try to avoid totalling and recording for a year in one summary because who knows what challenges you might have to face in the middle of the year. If you find it too much to make your own budget sheet using pen and paper, try some of free online budget planner websites such as or use Microsoft Excel and keep a track of your income and expenses. Let's make this new year a saving year!


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    • rosika profile image

      rosika 4 years ago

      Hi Drax...Thankx for your does take a lot of time to plan a budget, but once planned it is quite rewarding, isn't it?

      We should collaborate soon!

    • rosika profile image

      rosika 4 years ago

      Ya that is right honeyBB...Many of us don't realize why we are not saving untill we try to track back on our credit card statement and starting planning our budget for coming months or year! Thank you for reading and commenting!

    • HoneyBB profile image

      Helen Laxner 4 years ago from Illinois

      Great job, Rosika, this article is helpful in making people realize that they spend too much money unneccessarily and can save a lot if they cut some things out. Thanks for sharing. Voted+++

    • Drax profile image

      des donnelly 4 years ago from NYC....

      Rosika... great Hub, so much work goes into one of these... we should collaborate on one sometime... :-)