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Creating A Household Budget

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Creating a budget can be a very difficult task. Although we as consumers know that we need to pay our bills, buy our necessities, and put money away for savings, we don't really know how to start.

I know from personal experience how hard creating a budget can be. In the beginning stages of my road to financial freedom, I would write all my expenses down on paper and noticed that I had little and sometime nothing left over to save. I tell my clients that seeing everything on paper is only the first of many reality checks while getting their finances in order.

I think all advisors in the financial world can agree that using categories helps tremendously. Everyone will not have the same categories thus making every budget unique.

A category simply is nothing more than a grouping. Instead of listing each credit card bill separately on my budget, I will give all of my credit cards a category, for example I will list it as "debt". Some popular budgeting categories are housing, savings, utilities, donations, healthcare, miscellaneous and income to name a few.

There are many budgeting software programs out there. I suggest however, that in the beginning stages of creating a budget you should continue to do things manually. This way you are constantly viewing your money and staying in touch with your expenses.

Another very important task of a successful budget is keeping up with your expenses and all of your receipts. Now, I know this is difficult especially when buying what we think are small things but believe me it is very significant, especially for married couples. If one spouse is spending over $4.00 a day 7 days a week on a cappuccino, that one purchase is costing your household $120.00 a month. To help solve this difficult task, keep a box in a common area and commit to tossing all your daily receipts in that particular box. When you sit down to work on your budget pull out all the receipts and categorize them. I suggest you do this weekly in the beginning. The box can fill up pretty quickly, especially when two people are contributing their individual receipts.

Last but not least place your categories in a percentage list. For example look at your life in the eyes of a lender. You should spend no more than 35% of your gross income on rent or a mortgage payment including tax and insurance. If you're spending more than 35% adjust your budget according to your true picture. However the total of all your categories cannot exceed 100%. Once you tally-up your actual budgeting totals, compare them to your translated percentage dollar amounts and see how you rate. Most will find out that they have a lot of work to do.

If you find that creating and sticking to a budget is overwhelming, seek the help of a professional.

Dina D. Harbour, Financial Coach (or visit)

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Financial Management Experience:
Since 1986 Dina has taken an interest in the financial world. Starting her career as a Loan Clerk she quickly learned the importance of establishing good credit. After examining and improving her own financial situation she began to do research on minority lending in efforts to understand the reasons why minorities have the lowest approval rates for home loans. Her findings sparked a desire to share with others what she learned.

Since that time, she has worked as a Loan Closer for the SBA, Loan Officer for ACORN Housing, Trust Assistant for Wells Fargo Bank, and successfully won a $5000 laws suit against Equifax Credit Bureau in 2002 for reporting improper credit information. She has over 18 years experience helping people understand the importance of debt and credit. She has given many seminars over the years to Non-Profit Organizations, Libraries and private groups.

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