4 Steps to Create Your Household Budget

4 Steps to Create Your Household Budget

Create Your Budget

For the majority of Americans, a household budget is an important resource for dispersing our limited income among seemingly unlimited expenses. Creating and maintaining a spending plan energizes some people, but others see it as a daunting chore.

Developing and sticking to a household budget is actually very empowering. Once you have earmarked your income for specific expenses, you can safely plan a meal out and know you’ll still have enough for your car payment. Follow these steps to prepare a budget and take control of your finances.

1. Calculate Your Total Income

Add up the income from all the members of your household. This includes anyone living in your home, including your spouse, children or parents.

Sources of income could include:

  • Wages, salaries and tips
  • Interest and dividends (Interest income can be earned from your bank accounts; dividends may be received if you hold stock in a company.)
  • Rental income (Net rental income is the total amount of money received for rent after expenses for the property have been paid.)
  • Social Security benefits
  • Miscellaneous income (Other income may include gifts received, or money taken from an IRA, 401(k) or pension.)

2. Determine All Expenses

There are really two types of expenses: fixed and discretionary. Fixed expenses (such as a cable bill or rent payment) are due on a regular basis and you typically pay about the same amount each time the bill comes due. Discretionary expenses happen at irregular intervals and fluctuate in cost.

  • Start by entering the fixed expenses in your budget.
  • Next, track your spending for 30 days to see where your discretionary dollars are going. You can either write down what you spend or  review your debit or credit card history.
  • Once you have an idea of your discretionary spending, categorize those expenses and add them to your budget. 

3. Think About Your Goals

Now you have a better picture of how your money is flowing in and out. If you have more money going out than coming in, you should look at areas for adjustment, such as dining out or reducing your cable bill. 

Consider the changes you need to make in your spending so you can move toward your financial goals. For example, if one of your financial goals is to get out of debt, could you reallocate some of your money to pay down an outstanding bill? Perhaps you would like to contribute more toward your retirement account. Are there areas where you can cut back spending to help prepare your finances for retirement?

4. Stick to It

It may take a few months of tracking to establish your budget, so don’t be too hard on yourself at first. Set aside some “fun money” so you won’t feel too deprived or tempted to dip into money reserved for other areas. Remember, your goal is a budget that puts you in control of your spending and gets you to your end goals.

Use the "Small Changes, Big Savings" calculator to see how much you can cut back on your spending by making small adjustments in your daily life. 


Group annuity contracts are issued by American United Life Insurance Company® (AUL) and registered variable annuity products are distributed by OneAmerica Securities, Inc., a Registered Investment Advisor, Member FINRA, SIPC, One American Square, Indianapolis, IN 46282, 1-877-285-3863. McCready and Keene, Inc. and OneAmerica Retirement Services LLC provide administrative and recordkeeping services and are not brokers/dealers or an investment advisors. Neither AUL, OneAmerica Securities, McCready and Keene, OneAmerica Retirement Services nor their representatives provide tax, legal or investment advice.