Outline for a Household Budget
A simple household budget keeps you from overspending or going into debt. Budgets also help you save for the future. To create a budget, you must figure out what living expenses you have and where you spend your excess income each month. You can create a simple budget using a pen and paper, keep track of your money on your computer using a spreadsheet program or buy advanced budgeting software.
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Fixed Expenses
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Fixed expenses include any expense you pay the same amount for each month. Fixed expenses cover the cost of your home, such as a mortgage or rent payment, homeowner's insurance premiums or condo dues. Fixed expenses also include the cost of everyday living, such as your auto loan payment, car insurance or day care fees. Debt payments or loan payments that do not change from month to month also fall into the fixed expenses category.
Variable Expenses
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Variable expenses include any essential payment you must make each month that does not have a set price. For example, utility bills often change from month to month. Grocery bills also vary. Variable expenses can also include things you need for daily living, but may not have to buy on a monthly basis. For example, school supplies, clothing, personal care items and cleaning supplies all fall into this category. Set aside money each month to cover the cost of these occasional items.
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Discretionary Expenses
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Discretionary expenses include anything you buy on a regular basis but do not absolutely need to survive. For example, an Internet, cable or cell phone bill represents a fixed expense that you pay for each month but could eliminate if needed. The cost of entertainment also falls into discretionary expenses. Going to restaurants, purchasing movie tickets or renting movies at home all qualify. Setting aside money each month for discretionary expenses will let you enjoy life without going over budget.
Savings
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Having an emergency cash fund will help keep you from financial ruin. You can use emergency cash to cover car repairs, buy a new appliance or cover an unexpected vet bill for your pet. You can also build savings to pay for things you want to do in the future. For example, you can save for large purchases such as a house, a new car or a vacation, or for smaller purchases such as a new TV, furniture or a day trip. By setting aside a portion of your income each month you can build up both an emergency fund and a reserve fund.
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