How to build a household budget
A household budget brings everyone's income and every shared cost into one plan. Below are six steps, then a full worked example for a couple with one child earning £38,000 and £26,000, who take home about £4,213 a month after a 5% pension.
Build it in an evening.
- Add up take-home income for everyone who contributes: salaries after tax, pension and student loan, plus Child Benefit and any other regular income.
- List fixed costs from three months of bank statements: mortgage or rent, Council Tax, bills, insurance, childcare, debt payments.
- Estimate variable costs like food and fuel from the same three months. Use the average, not your best month.
- Add an annual costs pot: total up yearly and irregular costs and divide by 12.
- Decide savings first, then fit spending around what is left.
- Agree how you split it. Couples often use a joint account for shared bills, funded in proportion to income.
A family budget on £4,213 a month.
| Category | Item | Per month |
|---|---|---|
| Housing | Mortgage | £1,050 |
| Housing | Council Tax (Band C) | £165 |
| Housing | Buildings and contents insurance | £35 |
| Bills | Energy | £150 |
| Bills | Water | £45 |
| Bills | Broadband, TV licence and two phones | £85 |
| Family | Childcare (after funded hours) | £420 |
| Family | Food and household shopping | £550 |
| Transport | One car: fuel, insurance, tax, servicing | £260 |
| Debt | Car finance | £180 |
| Lifestyle | Eating out, activities and subscriptions | £220 |
| Lifestyle | Clothes, haircuts, gifts | £120 |
| Annual costs pot | Holidays, Christmas, MOT, school trips | £150 |
| Savings | Emergency fund and goals | £300 |
| Total | £3,730 |
The budget leaves £600 unallocated each month, a buffer for price rises and one-off costs. Example figures only; local costs vary a lot.
The example, by category.
| Category | Per month | Share of income |
|---|---|---|
| Housing | £1,250 | 29% |
| Bills | £280 | 6% |
| Family | £970 | 22% |
| Transport | £260 | 6% |
| Debt | £180 | 4% |
| Lifestyle | £340 | 8% |
| Annual costs pot | £150 | 3% |
| Savings | £300 | 7% |
Housing and childcare are the two biggest costs for most families with young children. If the budget does not balance, start there: check you are claiming all funded childcare hours and Tax-Free Childcare (the government adds £2 for every £8 you pay, up to £2,000 per child a year).
Fair ways for couples to share bills.
| Method | How it works in the example | Good for |
|---|---|---|
| 50/50 | Each pays £1,865 | Similar incomes |
| In proportion to income | A pays 58% (£2,166), B pays 42% (£1,564) | Different incomes |
| All in one pot | Both salaries go into one account; each gets equal personal spending money | Shared finances |
The affordability calculator shows what is left after your costs, and the take-home pay calculator gives each person's exact income.
Household budget FAQs
What if our budget does not balance?
List costs from biggest to smallest and look at the top five first: housing, childcare, car, food and energy. Switching deals at renewal and claiming entitlements usually makes more difference than cutting small treats.
Should we include pension contributions?
Use take-home pay, which already has workplace pension contributions taken off, so you do not count them twice.
How often should we review it?
Monthly at first, then at least every six months and whenever a deal, salary or family situation changes.
MoneyHelper budget planner · GOV.UK Tax-Free Childcare · GOV.UK Child Benefit rates. Figures are worked examples for planning, not financial advice.