Setup a Household Budget

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Step 1

Your first step should be to write down each of your completely necessary, recurring monthly bills. This includes everything from your mortgage or rent to your car insurance. As a responsible adult these will be paid. This does not mean you cannot shop for a better deal but it does mean not paying them is not an option.

Step 2

The second step is to write down your discretionary, recurring bills. This includes your cable bill, your cell phone bill, your lawn care service; anything some people live without but you pay for.

Step 3

Now that you have determined your monthly, recurring costs you can begin to compare your results against your monthly income. Chart this on a spreadsheet so you can determine your completely discretionary spending.

Step 4

Now that you have determined your completely discretionary spending stop and write down your priorities. As has long been said, if you want to know what is important, open someone’s checkbook. Is your discetionary spending consistent with your priorities? I have seen a lot of people claim their child’s education is important yet have supercable and do not have a 529 for their child (which can be funded for $25 per month).

All opinions aside, determine a percentage of your discretionary spending that should be spent to achieve your goals in life. Take this percentage against your remaining income and you have your budget.

Step 5

Saving money on necessary, recurring spending is up to the financial institutions; Saving money on discretionary, recurring bills is a combination of the financial insitutions and you; Saving money on discretionary spending is entirely up to you. Expand your speadsheet to include every dollar that you spend.

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