How Do You Go About Budgeting Household Expenses?

budget household expenses

How Do You Go About Budgeting Household Expenses?

Every household seems to have a different way of budgeting. There’s no right or wrong way to go about budgeting household expenses, but there definitely are a few ways that are more popular than others.

If you’re looking for a way to spice up your budgeting, check out these ways to budget below.

The Cash Envelope Budgeting Method

If you have trouble sticking to a budget, the cash envelope method of budgeting might be right for you. With this method of budgeting household expenses, you only use cash.

You’re not allowed to use any type of debit card, credit card or check unless there is absolutely no other way to pay a bill. Exceptions can be made for recurring bills like mortgages, cell phones, utility bills, etc and should only be paid via debit card or check so you can’t fall into debt.

Every payday you go to the bank and withdraw your cash allowance for all of your regular spending. Then, you divide the money up into envelopes that are each labeled with a spending category such as groceries, pet expenses, gas and dining out.

Next, whenever you go out to spend money, take the envelopes for the categories you’ll be spending money in. You can only spend the money on expenses that match each corresponding envelope. When the money in the envelope is gone, you can no longer spend any money in that category until your next payday.

This method of budgeting works great for those who have spending problems because once your cash is gone you can’t spend any more money until the next payday. There is no way to overspend with this budget!

The 50/30/20 Budget

The 50/30/20 budget is a unique way of budgeting household expenses while not having to micromanage a bunch of categories. Instead, you only have 3 categories to budget which include needs, wants and savings.

Needs will account for 50% of your budget with this model. Needs include things like basic housing, a basic car to transport you around town, basic clothing, food and other things you need to live your life and manage your career. Note, fancy cars and houses aren’t paid for out of the needs category. Anything above the basic model is considered a want in this budget.

Wants are the second largest category in the 50/30/20 budget and come in at 30% of your budget. You can spend this 30% of your budget on whatever you want! If you want to spend 30% of your budget on pumpkin spice lattes, go for it! Just remember, you can’t spend more than 30% on wants.

The final 20% of your budget in the 50/30/20 budget is for saving. Savings can be used to pay down debt, save for your future retirement, or save for a future large purchase like a home. Personally, I think 20% is kind of low for saving for all of these things and paying off debt, but that’s how the 50/30/20 budget is set up to work.

The “I Don’t Need A Stinkin’ Budget” Budget

The most common budget used in America today is called the “I Don’t Need A Stinkin’ Budget” budget. This budget involves no budgeting whatsoever. A select few families can pull this off without running into financial problems, but even they may be prone to over spending.

This budget is not recommended if you have financial goals you’re trying to achieve. However, if you’re independently wealthy, the “I Don’t Need A Stinkin’ Budget” budget may not be a problem.

No matter which budget you choose, you need to find a budget that works for you. Budgeting helps you achieve financial goals that you may not otherwise reach.

What budget do you personally use for your household expenses? Which of the above budgets is your favorite?

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Lance Cothern
Lance Cothern loves everything personal finance and has his own blog exploring his thoughts on the subject at MoneyManifesto.com. Together with his wife, they've paid of over $80,000 in student loans on their way to financial success! In addition to his blog, you can connect with him on TwitterFacebookPinterest or Google+.