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