3 steps to create a household budget and manage money


Taking control of your family budget can be a daunting challenge. Managing your expenses well can be the key to finding ways to save money and balance the family budget – but we all know that when life happens, even the best-laid saving plans can go out the window.

Like anything overwhelming, sometimes the best way to get started is to break the most important tasks down into several straightforward steps. A simple three-step guide can help you on your way:

  1. Create a household budget
  2. Make a savings plan
  3. Review regularly to find ways to save money.

Of course, it’s important to remember that everyone’s situation is different. Be sure to seek financial advice from a professional if you feel you need more help.

But for now, let’s run through the basics.

  1. Creating a budget

One of the hardest things is keeping track of what you spend, especially when inevitable curveballs come your way. Having to buy a new washing machine or hot water system often happens at the least convenient time!

To help, we’ve created this handy budgeting-at-a-glance guide to help you work out what you spend, separated into fixed and variable expenses. This might help you successfully set aside money for when you need it the most.

Fixed expenses

Fixed expenses cost the same amount each week, month, quarter or year. These bills are usually there to stay – you can’t do much to stop them coming in, but there might be small tweaks or changes you can make to reduce what they cost.

It’s much easier to budget for fixed expenses because they’re charged regularly. This means you can plan for them and you’re likely able to estimate how much they’ll be.

Fixed expenses include things like:

  • Mortgage/rent
  • Other loan or credit card repayments
  • Council rates or body corporate fees
  • Health, home, car, and life insurance
  • Utilities – electricity, gas, water, phone and internet. Check out some energy saving tip too and see how bundling some of your fixed expenses can help you save
  • School or childcare costs
  • Child support
  • Regular medical expenses
  • Superannuation contributions
  • Tax



Variable expenses

Variable expenses change regularly. While many of your variable expenses form an essential part of life and are composed of things you can’t really do without, they are more likely to be influenced by the decisions you make on a day-to-day basis.

Variable expenses usually represent the biggest opportunity to make lifestyle changes or do things differently to save money.

Examples of variable expenses include:

  • Groceries and food
  • Entertainment – special treats, movies, concerts and streaming services
  • Holidays
  • Clothing
  • Haircuts and beauty treatments
  • Toiletries
  • Household maintenance and repairs
  • Car repairs, petrol, parking and public transport fees
  • Gym fees
  • Vet costs
  • Birthday, Christmas and special occasion gifts
  • Babysitters
  • School supplies
  • Enrolment fees or equipment for things like sports, music or other hobbies
  • Discretionary medical fees, like specialist appointments, medicine, medical devices, dental services and the purchase of glasses or contacts
  • Charity donations.

To really take control of your household spending, try documenting your fixed and variable expenses in a simple budget spreadsheet or app. You can add in your income too to get a close-to-complete picture of your total family budget, and how you’re managing your money.

  1. Make a savings plan

Set goals

Once you’ve got a handle on your household budget, it’s time to set goals for what you want to save for. Is it a new car, family holiday, that bathroom renovation you’ve put off for years?

Be specific

Try to be specific about how much achieving your goals will cost. Knowing exactly how many dollars you need to save will help you plan your regular contributions, and if you’ve set a deadline, you can work backwards to understand how much money you need to put aside per month.


Share your plans

Talk to your family or friends, and make sure everyone in your household is on board and understands the goal. Ideally, it should be something that excites you – it helps makes saving motivational by rewarding you at the end with your long-wished-for purchase!

Prepare for a rainy day

It’s also a good idea to create a ‘savings buffer’ for any unforeseen financial emergencies. Unexpected expenses – a bingle in a car park, a rush to the vet or a broken foot – can be distressing enough without added financial stress. It’s sensible to set aside a portion of your income for these ‘just in case’ moments.

  1. Find ways to save money

Now you have your household budget created and your goals set, it’s time to find ways to save money. Luckily, all your hard work coming to grips with your expenses should have already given you some savings insights – but here’s some additional tips.

Reduce your fixed costs

While it can be tricky to do, it’s still possible to lower your fixed expenses. One common way is to look for a better deal on things like insurance, utilities or your loan and credit card rates. Small changes here can reap rewards regularly for months or even years to come.

Tighten the belt on variable costs

It’s may not be a lot of fun, but reigning in your lifestyle can go a long way to putting some extra money in the bank.

Finding budget alternatives that are still enjoyable is the key – can you swap nights out on the town for nights in with friends, takeaway coffee for BYO or an afternoon at the gym for a run around the block?

Think about bundling some of your costs with the same provider

Increasingly, organisations are finding ways to help their customers save with a one-stop-shop approach to services. Using the same provider for a range of services, including internet, phone, insurance and even your utilities, such as electricity, can help you save time and money. Plus, you benefit from the support of reliable brands, flexibility, discounts and great customer service. You could save a bundle, simply by bundling your services.

With a little bit of planning, these three simple steps will be key to help you create and manage your household budget. Remember, a little bit of time spent sorting out your financial priorities means money saved down the track – and plenty to look forward to when your savings goals become reality!