If you’re like most people, you work hard for your money. You need much of that income to meet your obligations – housing, food, transportation, insurance, etc. But you also would like to have a little extra for the finer things in life – something new for the house perhaps, or a nice vacation.

The key to having enough for both your needs and wants is to spend your money wisely. A good way to achieve that goal is with a specific plan. That’s what a household budget is, a written blueprint for spending. It helps you document how much you take in, how much you pay out, and provides clues as to how you might stretch your dollars a little further.

There are tools to help track your monthly budget using software or apps, and we also have a budgeting guide to help you with the basics.

A basic overall breakdown to start with can be:

  • 40% housing & utilities
  • 15% food
  • 5% personal expenses
  • 10% transportation (including car loan or commuting expense)
  • 10% clothing & entertainment
  • 20% debt repayment & savings


Before you dive in, here’s an overview of what you’ll be doing and why it should pay off:

Add up your income: You probably have a good idea of your annual salary, but to compute your household budget, you’ll need to know how much you earn monthly. It’s a good idea to use paycheck stubs – either paper or online – for all the wage-earners in your family. Be sure to also include regular income from other sources, such as interest or dividends. But make sure you subtract the amount deducted for taxes, Social Security, Medicare and your retirement plan. Your take-home pay is known as your net income.

Compute your expenses. How much do you spend each month? Expenses can be divided into two categories – fixed and variable. Fixed expenses are the things you pay the same amount for every month – housing, car loan payments, and your cable bill are common examples. Variable expenses change month to month, and can include grocery purchases, electric bills and clothing and entertainment costs. It’s easier than ever to find expense information – your UCU digital banking account and eStatements contain a history of payments from your checking account. Individual expenditures are also listed on credit card statements, which you can view on paper or online.

What’s the difference? The next step is to use basic math to figure the difference between your income and your expenses. If your net income exceeds your expenses, that’s great. Then you can work to make the gap bigger. And if your expenses exceed your income? Well, you know you need to look for ways to save.

Set some goals. You’re most likely to follow a budget if you have specific financial goals in mind. They can be short-term goals, such as eliminating some debt or buying new appliances. Or they can be long-term goals, such as building up savings to buy a house, fund a child’s college education or build a retirement nest egg. A good way to motivate yourself is write down your goals where you’ll see them each time you work on your budget.

Crunch the numbers. Now it’s time to really get organized. Divide your expenses into categories. These might include some of those mentioned above - housing, transportation, loan payments, utilities, food, health care and entertainment. Within those categories, identify each month’s fixed costs and variable expenses. You probably won’t be able to alter your fixed costs very much – after all, you have to pay your mortgage. But looking hard at the variable costs might pay big dividends. Could you save money by dining out less often? By reducing your electric use? By carpooling or taking public transportation? One way to think about it is decide what you need and what you merely want. Can you live without some wants to have more money to pursue those short- and long-term goals?

Some loose guidelines. A good rule of thumb is that 50% of your budget should go toward fixed expenses, 30% toward variable or flexible spending items, and 20% toward your goals. Make sure you build a smart savings plan into whatever formula you use, especially if you’re setting money aside for long-term goals. UCU offers interest-bearing savings accounts and Money Market accounts and certificates of deposits that will help you make the most of your money.

Keep plugging away. Once you identify ways to save, set monthly goals for each category. But that’s not the end of it. For all your efforts to pay off, you’ll need to keep constant tabs on your spending. Get in the habit of documenting every expenditure, whether you save a receipt, send yourself a text or make a note in a budgeting app. That very act may make you think twice about buying things you don’t really need. And check in with your budgeting software at regular intervals to track your progress.  As time goes on, you’ll sharpen your skills and come up with new and better ways to make the most of your money.

Bank with your Brain. Come in to UCU to see more of what we can do to help you achieve and maintain your financial goals and budget; our goal is to help give you a financial advantage.