A Deep Dive into Household Budgeting - Part Three

Welcome to Part Three of our “Deep Dive into Household Budgeting” segment. Hopefully, by now, you have reviewed our Household Budget Worksheet and started one of your own. If not, I would suggest reading the first and second post in this series so you can get up to speed. All set? Good.

Entertainment

Does your budget include “fun” money? It’s important to outline entertainment in your budget. Whether you are an avid gamer, crafter, sports nut or horror con fanatic (guilty!), list it in your budget. Admittedly, this is probably one of the first places to cut back when times are tough, but if you can swing it, set aside some cash for what you love. Think of it as part of your mental health. You know what they say about all work and no play...

Banking

Are you still banking with one of the big banks? You’ll probably have to put some money in this area. If seeing all of those fees you’re paying doesn’t make you want to switch to a credit union, maybe this will.

Giving

You know that birthdays and holidays come around every year, but you still never plan for the impact on your wallet, right? I used to do the same thing. Then, I decided to start budgeting for all of those things. I’m ashamed it took me so long to do it, but I absolutely wouldn’t go back! Think about how much you typically spend on friends and family each year and include it in your budget. Don’t forget about holiday tips and gifts for daycare providers, teachers, mail carrier, trash collectors, etc. This is also a great way to never forget a birthday or anniversary again!

You will also want to include tithing, charitable donations, and fundraisers here. If you are unsure of the exact amount, go ahead and put in an estimate. I always recommend allotting for more than you think you need, just in case.

Family Expenses

This is another category I would consider a heavy hitter. Here, you will list your school tuition (which is separate from student loans in the Debt Repayment category), allowances, activities, and daycare. If your family is like nearly half of American families, you’re probably paying 15% or more of your household income on childcare – ouch!

Financial Goals

It has been proven that just writing down your goals increases the likelihood of them coming to fruition. Use this section to write out your long-term and short-term goals and you can always revisit and revise as necessary. For instance, if you’re planning a once-in-a-lifetime dream vacation, plot out all of the expenses and list it on your worksheet. After you meet the savings goal, you can think of a new goal you want to meet and write it down. You can use my favorite bill-splitting method for savings goals; simply divide the total amount you need to save by the number of months (or pay periods – whichever you prefer) you have until you need to use it and voila! You have an easy and effective way of saving for your goal without taking a big hit at any one time. Anything that makes saving painless is a good thing, in my book.

Income

Now we are down to the nitty-gritty. This is where you will list all of your sources of income. Don’t forget your side gigs, seasonal work, Etsy shop, or the like! Notice that I have indicated GROSS income; why would I do that? When you neglect to factor in (or underestimate) tax withholdings, you might end up with a shortfall. You’ll see that I have accounted for these withholdings in the calculation section of our budget worksheet. If you prefer to use net income, you can adapt the sheet based on your preference. The bottom line is that I want you to be aware of those things that can surprise you at the end of the year. Special thanks to an eagle-eyed reader, Dan P., who pointed out the importance of identifying and distinguishing between Gross and Net income and the impact it can have on one’s budget.

Calculation

Here’s the fun part. Now that you’ve completed each section of your budget, it's time to calculate your results. You can easily see your total income, monthly expenses, and savings goals. Don’t forget to enter your withholdings for the most accurate calculation of your discretionary income.

How did you do? Did you have enough left over for fun money? What about if you have a negative amount? The great thing about listing every expense is that you can spot the areas where you can cut back if you need to.

Talk about a deep dive! If it is budget-able, we talked about it, right?  Did you have any suggestions? Feel free to comment below, or email me! I’d love to hear from you.

Krista Kyte is a personal finance blogger and personal banker with over 17 years of experience in the financial industry. Krista is passionate about helping our members understand their financial situations. She writes tips that will help consumers reach and maintain financial security, and start living the life they’ve always wanted.