Creating a Household Budget

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The next component needed to get your finances under control is to create a household budget. This is an extension of the work that you should have completed under the Know Thy Finances section of the Puzzle Box Paradigm.

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  1. White Wealth Belt: Introduction
  2. Cleaning Up Your Credit Report
  3. 3 Debt Relief Options If You Can No Longer Make Minimum Payments
  4. Creating a Household Budget
  5. Strategy for Paying Off Debts Faster
  6. Saving and Investing Strategy & Conclusion


The purpose of the Know Thy Finances section was to have you calculate and summarize your financial situation as it stands today. As part of that process, you should have also identified obvious areas where you could reduce spending. If you’re not familiar with the Puzzle Box Paradigm or that section, please go back to it before proceeding here. It’s very important.

The purpose of this section is to provide you with a couple of organized ways to budget your expenses going forward, analyze them on a monthly/quarterly/annual basis, and make adjustments along the way.  You can track and analyze your spending habits using free online services or manually.

Free Household Budget Software – Tracking Expenses Using Online Tools

One of the best online tools for keeping your finances organized is It’s free and pretty darn slick. I use it. Once you sign-up, you would connect the service to your bank, credit card, and investment accounts so that it can automatically pull in those details and transactions.

You can manually enter information about loans, property, and other assets and liabilities as well. The service will keep a running tally of your net worth and provide all kinds of charts, graphs and reports. This will allow you to easily analyze your expenses and spot trends.

You can create a household budget, set goals, set bill due reminders, and use a host of calculators for retirement planning, buying a car or home, etc.

There are also Mint apps you can download to your mobile devices that will allow you to access all these features while you’re traveling or on the go.

Finally, Mint will suggest other service providers that can help you save and invest money. I’m always a bit leery about taking these types of recommendations. That’s because Mint makes its money when you sign up with one of those services. It’s not like they went out and found only the best ones.  So while some of the services might be totally fine, I would suggest that you perform some independent research first.

Household Budget Spreadsheet – Tracking Expenses The Old Fashioned Way

I know that many people don’t trust having their personal information stored at some online web site that they don’t quite trust. No problem. Creating a household budget can also be done using a simple spreadsheet. I’ll show you how. The only thing that you won’t get, when compared to the online tools, are the cool charts and graphs and the ability to slice and dice your information six ways from Sunday.

So the first thing you should do is open your favorite spreadsheet tool, such as Microsoft Excel, and create a template similar to the one below. (Note: Of course, you could search online for free budgeting software that you would download to your computer, but I haven’t found one that knocks my socks off yet.)

budget spreadsheet template

Most of the template elements are self-explanatory. The income sources are monies that you receive every month to live on. If there’s a source that I didn’t list, add it to your template. The same goes for the expenses. My template is meant to be a guide, so feel free to expand it to match your spending habits.

Now, you will notice that expenses are broken into four broad categories. They are:

Essential Fixed Expenses – this would include important expenses for which the payment amounts will be the same every month.

Non-Essential Fixed Expenses – this would include nice-to-have items for which the payments happen to be the same amounts every month.

Essential Variable Expenses – this would include important expenses for which the payment amounts will be different every month.

Non-Essential Variable Expenses – this would include nice-to-have items for which the amounts you pay every month will be different.

If you’d like further help with filling out the budget spreadsheet, visit this article...6 Easy Steps to Creating a Household Budget and Reducing Debt

Also, if you’ve completed the work under the Know Thy Finances section of the Puzzle Box Paradigm, you know how much you’re spending on the various items listed under the broad expense categories. Using that information, enter estimated amounts that you would like to spend in the “Budget Amount” column.

At the end of each month, complete the “Actual Amount” and “Difference” columns of the spreadsheet.

Analyze the differences and determine why you went over your budget. Resist the urge to change the budgeted amounts. Instead, just add a note at the bottom of the spreadsheet that explains what happened.  This will make it easier to prepare quarterly and annual summary versions of the report.

Action Step:

  • Create a household budget and compare budgeted versus actual spending on a monthly, quarterly, and annual basis.

>>>Strategy for Paying Off Debts Faster>>>

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