Making a budget

Ah, the B word. Don't like it. Don't want to do it. But you will never get on top of your finances, and never live sustainably, without it. And when you have a budget, you are more in control. You are not buffeted about by bills hitting you from all directions (well, maybe by a few).

If you already have a budget put together, either move on to the next section, or keep reading to see if there is any idea you are not yet using.

If you have any suggestions on how household financial management can be done better, feel free to send them in.

Start with a page like this one.

Here is a version you can print out, and one you can edit by opening it in a word processing program. You can also create it by hand or with a table function in a word processor.

Always be ready to adapt information like this to your own circumstances. For instance, the budget above assumes that you have access to group health insurance, are depositing into a retirement fund, have access to a healthcare reimbursement plan, use the internet at home, have natural gas, have a car, have a car payment, and have quarterly payments of some kind. Some or all of these might not be true. You may have other monthly payments.

If you own a house and pay quarterly payments for water and trash removal, you will also need a quarterly budget like this.

Once again, here's a version you can print out, and one you can edit. Adapt this to your own circumstances.

Research the amounts you put in the budget carefully to ensure they are accurate.


Some explanations:

Healthcare reimbursement

Some employers offer a plan that lets you deduct a monthly amount for out-of-pocket healthcare expenses. No taxes are taken from this amount. After you send in medical receipts, you receive the total amount from the receipts back in the paycheck with no tax withheld. This can save a lot of money, although it is not easy to do. See more about this in Lowering expenses.

Natural gas and Electricity monthly amounts

Utility companies often offer "budget billing," which converts the anticipated amount for the year's bills to an average monthly cost instead of a cost varying widely. This can help make your budget work better.

Medical allowance

This is for smaller out-of-pocket medical expenses. In Tracking transactions you'll find a good way to use this.

Car insurance

Your insurance company probably offers an automatic monthly withdrawal for car insurance payments. There should not be an extra charge. Putting the car insurance cost in your monthly budget is much better than having those big yearly bills hitting you out of nowhere.

Car payment

You can also do this as an automatic withdrawal. But be careful with automatic withdrawals. Use them only for vital costs, and be sure you trust and can easily get a hold of the companies that have such access to your bank account.

Transfer to quarterly account

If you are a homeowner and need to pay trash removal and water on a quarterly basis, one way to do that is to transfer a third of that amount each month to another bank account to later pay this and perhaps other expenses. Your bank can arrange for this to be automatic, if you would like. It is a hassle to set up another bank account, but it is yet more hassle to have expenses confused. You need to quickly know exactly what money you have set aside for which expenses.

Household allowance

This is a catch-all term for those items that don't fit the other categories—gasoline, haircuts, shoes—along that line. However, it is the most dangerous category. Tracking transactions will show you a good way to keep on top of this budget item.


So you have all your numbers in. Do they work? Is your Total left after all expenses either 0 or a positive number? If so, that is great. With the other suggestions on this site, and ideas you figure out yourself, you can come out well ahead, and maybe be able to work less. If not, you need to look carefully at Lowering expenses and Increasing income. And hop to it.

If you are someone with a variable income, you will need to concentrate on making your expenses as low as possible. There is no easy way to deal with a variable income. You might look at the lowest your income could be as a base, and set aside a substantial emergency fund (easier said than done). You might also look at changing at least part of your income to a steady form.

If you have debt beyond your home or car payments, this money management stuff is especially important. It is easy to just throw up your hands and fake it when your bills come, but you will never get beyond this. Paying off the debt needs to be a budget item. A big one. Pizzas and expensive birthday parties need to wait. This does not mean your life cannot be fun. It means you need to redefine "fun."