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Household budget

How to make a monthly household budget in 5 steps (with an example)

By M&E Solutions IT · Updated · 3-minute read

In short. write down your net monthly income, list your fixed costs (including yearly ones divided by 12), track your variable spending for a month, decide how much to save and set a budget per category, then review every month and adjust.

This guide explains a way to get organised. It is not financial advice: for investments, loans or important decisions, ask a qualified adviser.

Why you need a budget

As Consob, the Italian financial markets authority, points out in its financial education section, good planning starts from analysing the household's situation: how much comes in, how much goes out and over what period. The monthly budget is the simplest tool to do it.

1. Net income

Add up what actually reaches your account in a month: net salaries and pensions, other regular income. Irregular income (a thirteenth-month payment, refunds, occasional work) is best recorded separately and used for goals or emergencies.

2. Fixed costs, including yearly ones

Rent or mortgage, bills, subscriptions, instalments, transport. Then the costs that come once or twice a year (insurance, car tax, taxes, maintenance): divide them by 12 and put them in the month. That way they are no longer a surprise.

3. Variable spending, for one month

Groceries, fuel, eating out, gifts, small purchases: for one month, record everything, even a few euros. Group it by category: this is the step that usually shows where the money really goes.

4. Goals and a budget per category

Decide how much to set aside each month and what for (an emergency fund, holidays, a purchase), then set a ceiling for the variable categories. A widely used starting point is the 50/30/20 rule, popularised by Elizabeth Warren and Amelia Warren Tyagi in the book All Your Worth: about 50% of net income for needs, 30% for wants and 20% for savings and debt. It is a guide, not a fixed rule: with high rents or low incomes the proportions change.

Example of a monthly budget with the 50/30/20 rule (net income 2,400 euros, made-up figures)
ItemShareEuros a month
Needs: housing, bills, groceries, transport, insurance (yearly costs divided by 12)50%1,200
Wants: eating out, subscriptions, hobbies, gifts30%720
Savings and debt: emergency fund, goals, extra repayments20%480
Total100%2,400

5. Review every month and adjust

At the end of the month compare planned and actual. If a category always goes over, either the budget was too low or there is a cost to rethink. Ten minutes a month is enough, always on the same day.

Which tool to use

  • Notebook: immediate, but you do the sums by hand.
  • Spreadsheet: flexible, but it needs updating on a computer.
  • App: handy on your phone, with due-date reminders; check what data it asks for and who can see it.

Consob also offers SAV€Rio, a free tool to practise saving.

The app we built for this

SpendyGO

Log income and expenses in seconds, set a budget per category, get reminders for upcoming payments and save for your goals, also in a space shared with the people you live with. It never asks for bank credentials.

Discover SpendyGO

FAQ

How much should I save each month?

It depends on income and costs. The 50/30/20 rule suggests 20% as a reference, but consistency matters more: even a small amount set aside every month, right after payday, makes a difference.

How do I handle yearly costs like insurance and car tax?

Divide them by 12 and set that amount aside each month. When the due date arrives, the money is already there.

How do you budget as a couple or a family?

It works well to separate shared costs (housing, groceries, bills), recorded somewhere everyone can see, from personal ones, which each person manages on their own.

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