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7 Steps to Build a Household Budget | Money Management Strategies

7 steps to build a household budget that really works.

Think back to your very first pay cheque – paper route money, babysitting income or a cheque from a part–time job. Did it come with instructions? Instructions seem to be included with the simplest devices these days, and yet, with something as important as our pay cheques, we’re left to figure it out on our own. No one is born with money management skills. By the time we’re adults, we are expected to be able to manage our money effectively; however few of us are taught how. Therefore, many people experience the usual emotions that occur when they don’t know how to do something well. These may include:Learn money management basics in order to build a personal, family or household budget.

  • Frustration
  • Guilt
  • Envy
  • Anger
  • Shame
  • Disappointment

Like driving a car or playing an instrument, the skill of managing money must be learned – and it’s never too late to start! Doing so usually pays immediate benefits. People might not earn more money if they budget well, but they will be able to use the money they do have wisely.

  The steps to building a budget involve:
  How to set financial goals for your money as you put together a spending plan. Step 1: Setting Goals
How to identify household income and expenses for your budget. Step 2: Identifying Income and Expenses
How to separate needs from wants in your spending as you build your budget. Step 3: Separating Needs from Wants
How to design and plan your budget and future spending. Step 4: Designing Your Budget
Planning your pay cheque and income for your household budget. Step 5: Putting Your Plan into Action
How to manage seasonal expenses in your budget. Step 6: Managing Seasonal Expenses
Monitoring, reviewing, and re-evaluating your budget and spending plan. Step 7: Looking Ahead

Someone who manages their finances responsibly has peace of mind and knows how to:

  • Pay their living expenses
  • Keep debts to a manageable level
  • Save for the extras that make life enjoyable
  • Avoid constant money anxiety

It’s not how much you make, but what you do with what you've got. Proper money management does not involve a magic formula to find more money. It simply means getting the most from the money you do have.

Before you read any further, take a quick look at your current money management skill level. Answer the following questions truthfully, based on what you do today. Ask yourself how much effort do you put in managing your own money? Do you keep track of what you spent in a day, week, or month? How many times do you regret spending so much money on something that will benefit you so little? You do not need to share your answers with anyone – they are merely to help you identify how you may want to improve your own money management skills.

The foundation of sound money management is the budget. However, for many people, the word "budget" evokes feelings of fear or frustration. Your budget is your plan for your money. It is based on choices you make and priorities that you identify.

Building a spending plan, or budget, is a step–by–step process. Once complete, your budget is the solid foundation with which you can manage your current income and expenses and plan for future possibilities.

Next Step

How to set financial goals for your money as you put together a spending plan. Step 1: Set Goals


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If all this looks like too much work, or you're really looking for something much quicker right now, check these out:






Budgeting workbook: 7 steps that will help you build a budget that works. Learning money management basics.

The steps you are going through can also be viewed as a PDF download in a workbook titled, 7 Steps that Will Help You Build a Budget that Works (you can fill out this PDF and save your work). Click here for a print only version of the PDF.