How to create a home budget

To know your home budget, use the 50/30/20 rule. You can find out your exact value for each category based on your income. This will help you plan your home budget better and handle your finances too.

According to the 50/30/20 rule, your total (income of all earning members) monthly take-home income is divided into three parts: 50% is set aside for needs, 30% for wants, and 20% for savings and debt repayment.

In this article

A home budget is a plan. It records the income and expenses to set a budget for a household. It’s not just for couples; even roommates or anyone who share costs at home can have a home budget.

Nearly all basic home budgets are based on the 50/30/20 rule. According to this rule, your total (income of all earning members) monthly take-home income is divided into three parts where 50% is set aside for needs, 30% for wants, and 20% for savings and debt repayment.

Find the result

Now that you know what the 50/30/20 rule is, you can find out your exact value for each category based on your income. Don’t forget to add the total combined take-home income of all earning members.

Find what is happening right now

Now calculate your current spending, and then compare it with the result you got from 50/30/20. Don’t forget to include everything, even the ones that are not obvious. You can also check bills or bank statements to be sure. 

Use the tools

You can use a spreadsheet to do the calculations. You can also download budget spreadsheet templates that are found on the internet and tweak them for your household and add categories. These templates would make everything easier and also act as a guide because they might have categories you didn’t think of. There are also budget apps that can be used by a single person, a couple, or an entire family.

Adjust  

Once you know how much money is in each of the 50/30/20 categories, you can make adjustments to maximize the savings category. 

This page is purely informational. Line does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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