Household Budget Planning

Household budget planning is an essential ingredient for successful Debt Free Living and debt management!

To begin you will need:

Financial planner - or print these Budget Worksheets


A calculator

Records of expenses: Checkbook,Bill Pay Records, Your Spending Records

Before you Begin

Where's The Money?

Before beginning any household budget you must determine where all of your money goes. This can be a difficult task. However, it is essential to success and cannot be skipped!

To do this you and your spouse will keep track of all your expenses for at least one week. Whether it’s cash, check or credit card, write it down.

This is is a crucial step and you will need this information later. It sounds tedious but is truly enlightening. Somehow it is mind shattering and life changing to realize that you may be spending over....

$500 a year on coffee....
Close to $2000 a year on lunch...
And a staggering amount each and every day on little things that you don’t even think about!

It's those little "Money Leaks" that can make or break a good spending plan! This will be where you find and repair a lot of the "money leaks" when it's time to fine tune your budget so you can live within your means. With that done. You can ...

Create Your Own Debt Free Living Household Budget!

Debt Free Living Household Budget Step One

Figure Your Monthly Income

Take your weekly net income and multiply by 4. Yes, I know that there are actually 5 weeks in some months, but for simplicity’s sake we will start with 4, see if that’s do-able on your expenses, and wha-lah you have a bonus paycheck every now and then to boost your plan.

It doesn’t work for everyone, especially if you've been living way above your means. If you find that you just can't make the program work on this calculation then you will include those extra weeks. Simply recalculate your monthly income.

Monthly income = 4.33 x weekly or Weekly income x 52 wks. per year divided by 12(months) will yield a monthly income figure.

Write down your earned income in the appropriate space in your Household Budget Planner.

If you have other incomes such as child support, alimony, investments, enter those to get a figure for your "Total Monthly Income."

Debt Free Living Household Budget Step 2

Categorize and Record Monthly Expenses

Expenses fall into two categories....

Variable or Irregular Expenses

Monthly Reoccurring Expenses

Variable Expenses

First you must recognize and record all expenses that do not occur on a regular monthly basis. These are your variable expenses because they are not paid on a monthly basis but, inevitably must be paid some time during the year.

Just use a worksheet at this point and do not enter anything into your planner yet.

Variable Expense Examples:

Taxes: Property,Income

Automobile: Maintenance, Repair

Household: Maintenance, Repair

Pet: Care,Veterinary, Supplies



Medical: Doctors, Medicine, Supplies

Newspapers and Magazines

School supplies


Insurance: Property, Auto,Life (can include in monthly expenses if paid monthly)


Note: You may have other expenses to include. These are just some examples.

Now add up all of your variable expenses and divide that total amount by twelve.

This is your Monthly Variable Expense Amount for your Debt Free Living Household Budget.

Enter this amount in your monthly planner as a monthly expense. I recommend keeping these funds separate from other regular monthly expense funds.

A separate checking account (fee free! preferably) is advisable. You can then build a savings in this fund equal to at least one years total variable expenses when funds are available.

In the meantime, pay your variable expenses from this account when needed.

Reoccurring Monthly Expenses

Record all your monthly reoccurring expenses in your Household Budget Planner or on your budget worksheet. If you have an expense that occurs monthly but fluctuates in amount, create an average cost per month and enter that figure. I used a high end figure for these amounts so as to allow myself plenty of room for error.

Common Household Budget expenses:

Utilities: Gas and Electric, Cable, Water and Sewer

Food:  Grocery,Dining Out, School lunches,Work lunches

Child Care

Insurance:  Homeowners,Health, Life, disability,Auto,Renters



Cell phone


Your household budget should now include one figure for your Monthly Variable Expense and all Monthly Reoccurring Expenses individually listed.

Debt Free Living Household Budget Step 3

Figure Your Debt Obligations Unsecured Debt

If you have not already done so, determine your monthly debt payment amount using the  Debt Reduction Made Simple Plan. Whether you have a professional debt management program or do it yourself, enter your monthly debt payment into your household budget planner or budget worksheet as a monthly expense.

Be sure you have included all unsecured debt including student loans and unsecured personal loans in your debt management plan.

Secured or Other Debt

Enter the amounts for all loan payments such as your mortgage, automobile loan ,secured personal loans (not unsecured loans already listed in your debt management plan), home equity.

Debt Free Living Household Budget Step 4

Savings and Giving

About Giving

Many people want to include a charity expense in their household budget. I highly recommend that you include giving about 10% of your monthly income to a worthy charity if income allows. If you can't afford it now don't stress over it! For more on how this expense should be included in your budget, please read the following advice on Giving and Including a Charity Expense in Your Household Budget.

Savings Expense

Now, enter a figure equal to at least 5% of your monthly income into your monthly budget under "Savings". We will start low and as you begin to reduce expenses try to increase this figure to at least 10%.

Multiple your total monthly net income by .05 to calculate this expense.

Your goal should be to put aside 10% or more of your income in savings. Treating your savings like an expense is the best way to make sure it doesn't get overlooked.

You may have to reduce this amount if your expenses are far above your income. Don't worry. You can reduce this to as little as 1% to begin with as long as you are making an effort. I have resorted to such low savings amounts during my worst financial times. Sometimes, it's just not possible. Everyone's needs and obligations are different.

I recently learned of a great program called Invest in Your Debt which validates my concerns about the "savings expense" or rather the inability for some families to include it.

While saving is important, it can not always be utilized in everyone's situation, especially if your outstanding debt is high. Don't stress over the lack of funds for a savings expense. Don't just throw in the towel if you just don't have enough money to spread around.

I strongly adhere to my belief that it is essential to prepare for unexpected events, just as I believe we should give to those less fortunate. No matter how broke you are, remember there is always someone who has less than you!.

However, I have personally experienced really tight budgeting periods where I could not accomodate the savings or charity expense. I learned not to give up but to keep working towards my goal, knowing that it was the debt holding me back. I had to get rid of the debt in order to get my finances back on track. The one sure thing I knew was that giving up would certainly not fix the problem. The only logical option was to keep budgeting my essential expenses and include these other expenses as the funding became available.

When you do save, get the most for your money. Most regular savings account currently earn between 1/2% and 2%.

Are You Finished?

Before you make your final calculations to compare income with expenses make sure you have included all your expenses.

Household Budget Planning Checklist:

All Monthly Reoccurring Bills

Monthly Variable Expense Amount - Have you considered all your inevitable irregular expenses and calculated a monthly expense for them?

Debt Management Payment

All Loan Payments - mortgage, car, etc.

Monthly Savings Amount

Charitable Donation

If you have included all your expenses and have calculated all net income then you're ready to face the music!

"Big drum roll here!"

Compare your income figure with your Household Budget expenses.

If you are like most Americans today, you will discover that you don't have enough income to cover all of these monthly expenses. That's how you ended up here!

Don't Panic

The next step is to review and trim down those expenses to fit within your income.

This is the principle of "Living Within Your Means".

Living Within Your Means is the Key to Debt Free Living.

You will learn to eliminate unnecessary expenses and reduce essential expenses until you have created a balanced household budget that spends no more than you earn!