The winter holidays and New Year brings a host of expenses, both big and small. Are you ready to stop digging out of holiday debt every year? Instead of stressing out about your finances, you can take control by making a proactive household budget. Sounds complicated? It doesn’t have to be. Here are the five steps to building a budget customized to your household and goals.


Calculate your household’s total monthly income. If you’re a salaried employee, look at your last few pay stubs. If you’re self-employed or a contract worker, figure out your average income. Remember to consider any seasonal changes in employment.


Next, calculate your average monthly costs. Save receipts, track expenses as they come up, and check your bank statements. Make a list of everything including:

  • rent
  • utilities
  • gas
  • food
  • insurance
  • entertainment

While you’re at it, note any significant upcoming expenses. These may include:

  • vacation costs
  • replacing big items like your car
  • creating an emergency fund – once you calculate how much you need
  • paying off credit card debt


Go down your list, deciding where each item falls under priorities. Is each expense necessary, important, or optional?

Necessary: You absolutely must pay these in full every month. Think rent or monthly insurance payments.

Important: You can cut back on these, but not eliminate them entirely. For example, your electricity and water bills.

Optional: These can be cut out if necessary. Some options include subscription TV services or dining out.

Build Your Budget

You know what monthly expenses you have, what future purchases to expect, and how much money you have coming in to cover them. Now it’s time to create your budget. Some people go low-tech with a spreadsheet or even a paper notebook. Others use financial planning apps like Mint or You Need a Budget. You can learn more about them here.

Sticking to Your Budget

Planning is one thing, but sticking to your budget can be a challenge. The trick is to not give up. There’s a wide selection of strategies to stick with your budget; keep trying until you find the right fit. Here are a few ideas:

Accountability Partners

If the whole household is on board with the budget, you can cheer each other on and help everyone make good financial decisions. Not at that stage yet? Read our guide to getting your partner on the same page with your budget.

Whiteboard on the Fridge

Install a dry-erase whiteboard onto the fridge. You can write out your monthly budget goals and be reminded of them every time you come for a snack. This way, you can keep a running tally of each major expense and circle the savings goals you’ve met.

Automatic Payments

Instead of fussing with payments every month, have your bank handle them. Once the system’s setup, you don’t need to keep thinking about it. Also, you won’t be tempted to splurge with money that’s tucked ‘out of sight.’