How to Start a Personal/Household Budget planning

Determine the net monthly income that you expect to receive in the next calendar month. Some people create one budget and use it until their finances change but the best way to budget is on a month-to-month basis. Some months may have more paychecks than another and you may find that some quarterly or annual payments will crop up and throw a standard budget off. Once you have determined your monthly income for the upcoming month, write that down on the top of your budget sheet.

List out all of your regular monthly expenses underneath your income information. You will want to list the type of expense, the amount of the expense and the due date. Some examples of regular monthly expenses are rent/mortgage, utility payments, insurance premiums and an auto loan.

Subtract your regular monthly expenses from your net income amount. This is not a required step but it helps you to visualize how much of your monthly income is used on regular expenses. It will also help you determine if your housing or auto expenses account for an unusually large portion of your income.

Write down all of your debt accounts in the next section. Examples of debt accounts are credit cards, student loans and installment loans. As with the regular monthly expenses, write down the debt name, monthly payment amount and due date. Subtract these figures from the figure that you reached in Step 3.

List any variable expenses that may come up. Examples of variable expenses may be an annual life insurance premium or quarterly waste disposal fee. Subtract these amounts from the number that you figured in Step 4.

Set aside funds for any savings and/or investment goals that you may have. It is important to set aside a portion of your income for savings. If a financial emergency arises, you can tap into your savings instead of looking to a credit card to cover the expense.

Repeat these steps every month. It will likely take two or three months to fine tune your budget as you remember items that you may not have included in your original budget.

Source: How to Start a Personal Budget