How to Make a Home Budget
Tally your household income, then divide it into three categories.
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Managing Editor If you live with other people, you probably share a lot of things in your home — the food, the couch and, possibly, the bills.
So why not also share a budget? Here’s how to make a home budget that will help keep everyone's spending under control.
What is a home budget?
A home budget is a spending plan that accounts for the income and expenses of a household. That could include partners, family members or roommates who contribute to joint costs. (Learn how to create a family budget, specifically.)
One way to frame a home budget is with the 50/30/20 guideline. According to the 50/30/20 budget, 50% of your monthly take-home income is devoted to needs, including minimum payments on debts; 30% to wants; and 20% to savings and debt paydown beyond those debt minimums.
If that income breakdown doesn’t work for you, consider the 60/30/10 budget: 60% of your monthly take-home income is for needs, 30% for wants and 10% for savings. Or look into different types of budgets that can better fit your situation.
In a home budget, your monthly take-home income should account for the income of both you and whoever you’re sharing expenses with, for instance.
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How to make a home budget
Make a home budget much like you would build any budget. Here are four steps:
1. Calculate an ideal budget for your household income
Start with your combined take-home income. If you choose the 50/30/20 budget, try our calculator to see how much you should ideally be spending per month in each category.
2. Inventory all household expenses
Tally your current expenses to see how that total compares to your income. A home budget should include expenses like child care, utilities, subscriptions and college savings, for instance. Talk to your partner or the other members of your household to ensure you’re accurately reflecting all of your spending.
3. Find a household budget template
Download a budget spreadsheet and adapt it for your household. NerdWallet has a free budget template that can be tailored to your financial situation. For instance, you can select if you’re a parent, homeowner, senior, etc.
4. Monitor and adjust your spending
Once you know where you stand, find ways to maintain or cut back. Most budget apps track your spending so you can spot ways to adjust it and stick within your plan. Some apps, including Honeydue, can be shared by more than one person, so your whole household can log and track spending together.
As for what next, check out our deep dive into how to budget, which gets into the details of how to prioritize your money for savings, debt and more.
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