A household budget is just a plan for your money each month: what comes in, what has to go out, and what's left for everything else. You don't need to be good with spreadsheets to make one. Here's how to build a UK household budget step by step, with a template layout you can follow.
Step 1: Work out your monthly take-home pay
Start with the money that actually lands in your account, not your salary before deductions. Your payslip shows your take-home pay after income tax, National Insurance, workplace pension and, if you have one, student loan repayments.
Add up every regular source of income for the household:
- take-home pay for each adult who contributes
- benefits, such as Child Benefit or Universal Credit
- regular income from self-employment, a pension or rent
If your income changes from month to month, use a cautious figure, such as your lowest month in the last six, and treat anything above that as a bonus.
Step 2: List your fixed bills
These are the bills that are roughly the same each month and have to be paid. Go through your bank statements for the last two or three months and list every direct debit and standing order. A typical UK list includes:
- rent or mortgage
- council tax (usually paid over 10 months, though you can ask your council to spread it over 12)
- gas and electricity
- water
- broadband and mobile phones
- TV Licence, if you need one
- insurance: home, contents, car, pet and life
- loan and credit card repayments
- childcare
- subscriptions: streaming, music, apps, the gym
Subscriptions are worth a careful look. They're easy to forget and often renew automatically.
Step 3: Don't forget the irregular costs
The costs that break most budgets aren't the monthly ones. They're the bills that come once or twice a year and always seem to be a surprise. Make a list and divide each by 12, so you can set aside a little every month:
- car MOT, service, tax and repairs
- boiler service
- annual subscriptions and memberships
- Christmas, birthdays and other celebrations
- school uniform, trips and clubs
- holidays
- dentist, glasses and vet bills
For example, if you spend £600 on Christmas, that's £50 a month. Put it aside from January and December stops being the most stressful month of the year.
Step 4: Estimate your everyday spending
These are the costs that change week to week: food shopping, petrol or bus fares, takeaways, coffees, clothes, nights out. Look at the last two or three months of statements to see what you really spend, not what you think you spend. Most people are surprised by at least one category.
A simple household budget template
Put it all together in one table. Here's an example for a made-up household, to show the layout. Replace the figures with your own.
| Category | Example item | Per month |
|---|---|---|
| Income | Take-home pay (two adults) | £3,400 |
| Income | Other income, such as benefits | £110 |
| Total income | £3,510 | |
| Fixed bills | Rent or mortgage, council tax, energy, water, broadband, phones, insurance | £2,000 |
| Irregular costs | Car, Christmas, birthdays, holidays (yearly total ÷ 12) | £250 |
| Everyday spending | Food shopping, transport, takeaways, clothes | £800 |
| Savings and debt | Emergency fund, extra debt payments | £300 |
| Total going out | £3,350 | |
| Left over | £160 | |
If the "left over" line is negative, you're spending more than you earn, and the next step is working out where to cut back. If it's positive, decide where it goes before the month starts, or it tends to disappear.
Step 5: Balance it
If the numbers don't add up, start with the costs that are easiest to change:
- Cancel subscriptions you don't use, or rotate them so you only pay for one streaming service at a time.
- Check you're on a good deal for broadband, mobile and insurance, especially when a contract ends.
- Plan meals before you shop. It's one of the quickest ways to cut the food bill.
- Set a weekly limit for spending money, rather than a monthly one, so it's easier to keep track.
A popular starting point is the 50/30/20 rule: about 50% of take-home pay on needs, 30% on wants and 20% on savings and paying off debt. It's a rough guide rather than a rule, and in areas with high housing costs your needs may take a bigger share.
Build a small emergency fund
Once the budget balances, try to build up some savings for the unexpected: a broken washing machine, a car repair or a gap between jobs. Even a small amount each month adds up, and it stops a surprise bill turning into new debt.
Budgeting as a couple or household
If you share costs with a partner or housemates, agree which costs are joint and which are personal. Many couples pay a set amount each into a joint account for bills and keep the rest separate. Others pool everything. There's no single right way; what matters is that everyone knows how it works and feels it's fair.
Review it every month
A budget is never finished. Take ten minutes at the start of each month to check last month against the plan, update any bills that have changed and look ahead at anything coming up, like a car tax renewal or a birthday. The more often you look, the fewer surprises there are.
For free, impartial guidance, including a budget planner tool, see MoneyHelper, the free money guidance service backed by the UK government. If you're struggling with bills or debt, MoneyHelper can also point you to free debt advice.