Smart budgeting is the key part of savvy shopping. If you do not plan your budget well then you may end up spending more money but getting lesser value out of it. As per the surveys, just around 15% of Indians really prepare detailed household budget or spending plan for their family every month. If in case you are among the 85% that don't prepare household budget, then you may be wasting your money on some stuffs which you can actually save and utilize it for some other stuffs which you or your family really needs.

Luckily, making a spending plan is not complicated as it appears. There are a lot of tools available which you can use to prepare and track your household budget. In the following section, we have listed down four key steps to prepare your perfect household budget or spending plan.

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Inspect Your Spending History

To make a realistic spending plan and to stick to it, it is very critical that you first examine your spending history and you be reasonable about what you spend. You should be doing a lot of transactions every month using credit cards, debit cards, internet banking and cash but you don’t have to frighten yourself thinking how will you go through this huge number of transactions?

The best and easiest approach to begin would be by letting an application do all the work. There are some mobile apps available which could connect to your credit cards and bank accounts and automatically generate your spending report categorized into various categories like dining, clothing, groceries, entertainment, travel, etc. You can use MyUniverse or Money View which are very popular mobile apps and both can generate spending report divided into various categories.

If you don’t want to give an application access to your money related records, then you will need to take do-it-yourself approach. So open your bank and credit card accounts check out the activities for few past months and inspect what and where you are spending. You can utilize this financial plan worksheet to record all your expense for the analysis. You might see that the incomes, expenses & categories listed in this template are not matching your requirements. So you need to review this template and remove incomes, expenses & categories which are not applicable to you and also add others which are not there in the template.

At last, you should have list of everything you spend your money on monthly basis and also the average cost.

Ensure to Stay Within Your Earnings

Now after inspecting your spending history, you have got a better idea of how much and on what you are spending. Now it’s time to compare your spending with what you are earning. If your total expenses are higher than your earnings then you will definitely need to think about your spending. Take a look of your expenses and see where you can cut back. Could you avoid few dinners out every month? Do you really need expensive internet or TV cable connection? Could you do carpooling to cut down fuel expenses? Are you really using all the subscribed services you are paying for? Sometimes even little changes like carrying your lunch every day, cutting down expensive coffee, etc. can add up over the month and help you to stay within your spending plan.

You may also have some target for monthly savings. So considering all that continue tweaking your spending plan numbers until what you are spending is not less than what you are earning minus your monthly savings target.

Record and Monitor Your Budget

Once you get a better understanding of your household budget, it is the time to record it all so that you can track it and ensure that you are within your spending limit. There are many mobile applications are available which could help you to create your budget, keeps you on track, notify for your pending bills, and tell you when you are going over your spending plan. Some of the popular mobile apps for budget planning and tracking are MyUniverse, Money View, MvelopesGood Budget, HomeBudget, etc. Using applications to create and track your budget will help you to save your time and get you notified when you are reaching or crossed your spending limits.

But if you don’t want to use applications, you could write it down in the note book or list it down in the spreadsheet. Creating and tracking your financial plan manually will need more time and energy every day but on the other side it keeps you better updated about where your money is going.

So now you have your household financial plan in place but you are not done yet. You will have to monitor it by using whatever ways works for you. Check out all you are spending and compare it with the budget you just created. If you are close to go over the planned budget for any of the category then slow down your expenses and ensure that you are not exceeding the planned budget.

Monitoring of spending is really important if you want to be within your planned household budget. This is the only way to measure that you are up to your budget.

Review and Change as Needed

Now you have your initial budget in place and you doing regular monitoring of it but you feel that it is not working out. No need to worry here, just review what is not working and do adjustment in your initial budget. Regardless of how precisely you thought of your financial plan, you may have missed something. Rather than abandoning your expense planning, just continue tweaking you spending plan until it is appropriate for your financial condition.

At last, we would request our readers to let us know how do you manage your household budget? Please post your experiences in the comments below.


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