Developing a Household Budget

Are you ever surprised by how much you spent at the grocery store because you picked up a few extra items? If you don’t adjust your future shopping trips, you may end up spending more on food than budgeted. ​

Over the next few months we will share strategies and tips for tracking and developing a food budget. Your food budget is just one part of your overall expenses, so this blog series will start more broadly and focus on developing a household budget.

Developing a household budget can be time consuming but it’s important for everybody, no matter how much or little money you earn.​ If you aren’t keeping track of money that you’re spending, it’s easy to spend more than you realize. A household budget will help you keep track of income and expenses, which can help you live within your means and set savings goals.

Developing your budget involves four steps: tracking your income, tracking your expenses, comparing your income and expenses, and then making adjustments.

Let’s look at these steps in more detail.

  1. Track your income.
    • Include all sources of income – wages, tips, Social Security, child support, unemployment, etc.
    • Include other types of assistance – SNAP/FNS, WIC, housing assistance, energy assistance, etc.
  2. Track your expenses.
    • Include recurring expenses – rent/mortgage, utilities, car insurance, etc.
    • Include periodic expenses – clothing, gifts, car maintenance, etc.
  3. Compare your income and expenses
    • Add up your income and then add up your expenses.
    • Are you spending more than you earn?
    • Is there room to put more money into savings?
  4. Make adjustments
    • Are you spending more in a category than budgeted?
    • Think about why the numbers didn’t match. Was it an unusual month (guests came so more groceries were needed)? It’s common to underestimate spending on items like cosmetics, food, gas, etc.
    • More money in one category generally means less money somewhere else (savings, entertainment, pocket money, etc.)

To get an accurate picture of your spending, try tracking expenses for one month or more. This printable worksheet from the Federal Trade Commission is a useful tool for tracking how much you spend by category (housing, food, transportation, etc).

​You can use different methods for tracking your spending on a daily basis. One simple method is the post-it note method. For the next month, carry a small pad of post-it notes with you and write down every purchase that you make. You’ll include everything purchased with cash, check, debit card, or credit card. At the end of each day, place the post it notes in the correct category on your expense-tracking sheet. This will help you add up the total expenses in each category. ​You could also use an envelope to place all your receipts in, and then transfer to the tracking sheet. It’s important to choose a method that’s easiest for you, so you stick to it throughout the month.

At the end of the month, you can add up expenses in each category to develop your budget. Did you spend more on food or clothing than you thought? Are you meeting your savings goals each month? Once you look at your spending habits, you can start setting financial goals.

​You can learn more about managing your money and making a budget from

Next month we’ll look specifically at your food budget and help you develop a food spending plan to works for your household.