How to Develop a Household Budget

Video Transcript

"When it comes to families or households, having a budget is a very important item. For large households that have many children and things of that nature, it's a more complex process. And of course for single people and couples, it's an easier process. But irregardless of that, it's important to have a system, and the best system to have is a ledger that tracks your expenses, either fixed expenses or variable expenses, and the income that's required to pay both. Fixed expenses range from auto loans that are constant every month. Your car payment is always constant. Also, your rent payment is constant payment every month, as well. Food, although it is a necessity of life, it can be variable every month. So you want to put that in the variable column, as well as clothing, as well. You may have student loans that are on a fixed schedule. Some of your installment debt requires the same payment each and every month. So that would be in your fixed column. It's important to control variable expenses, as well. And always remember to pay yourself first to develop an emergency cash cushion. This is Patrick Munro talking about how to develop a household budget."