How to Manage Household Finances in Your Rental Home

by Steffi Cook | Updated: Feb 11, 2020

Budgeting can be overwhelming. Keeping track of all your money coming in and going out stresses many renters. Trying to ignore it, however, won’t do you any good. Having a budget to manage household finances is crucial to eliminating the stress of money. If you’re suffering from that stress, here are some tips to help you come up with a budget of your own.

What a budget is really for

Most people fail to make and stick to a budget because they come at it from the wrong angle. A budget isn’t supposed to constrain you. It’s taking a different look at your money. When you manage household finances correctly, it’ll free up money to spend on what matters to you. This isn’t just the usual necessities, but also fun hobbies or things that you do on the weekends.

Set short and long term goals

Whether personally or as a household, you can’t budget effectively without a goal. Very short term, you need to pay all your bills for the month. Longer term, you might be looking to get out of debt. Even longer term, you could be looking to put away money for retirement. Whatever the goals you set, once you have them, build the budget around doing what it takes to get there.

List all your income

If you have a typical 9-5 job, this step can be pretty easy — you know how much money comes in just by looking at your paycheck. If you have a more unusual job, work for multiple companies or just have a side hustle, this can get more complicated. Come up with every source of income you have and add it together, making conservative estimates if your income is uncertain or irregular.

Write out all your expenses

Your rent and other big expenses, like insurance, utilities and car payments are pretty easy to account for. When compiling all your expenses, make sure you pay close attention to the smaller or less regular ones. Do you account for eating out or stopping for coffee in the morning? What about seasonal expenses, like Christmas gifts or taxes due in April? It’s easy to budget for an ideal month, but make sure you’re prepared for the worst.

Related: Saving Money on a Rental Home

Identify wants and needs

The answer isn’t keep only what you need and cut out the rest, but you should have a good idea of which of your expenses are higher priorities than others. Know which ones can be dropped and which can’t. If something isn’t strictly “necessary” but helps you unwind and keep sane, that’s a good argument for keeping it — so long as you can afford it.

Come up with a basic plan

Once you’ve figured out your priorities, you'll need to come up with a plan to manage household finances. You want to keep it simple. The easier it is, the more likely you are to follow it. Doing better is preferable to staying the same, so even a small improvement is an accomplishment.

Adjust based on what works

Once you’ve tried the new budget, you’ll identify problems. Old habits are hard to break, but you can with enough effort. If you need to try some tricks to help you handle money differently, then do it. It’s not about getting things perfect right away, but if you can do just a bit better and keep improving bit by bit, you’re on the right track.

Talk with others openly and regularly

With regards to household finances, whether you’re living with family, a significant other or just roommates, everyone should be involved. Talk to everyone when you need help or just to establish what your budget should be. Your personal budget and the household budget need to work together, so make sure to communicate if there are going to be any issues. You don’t need to share everything, just the information needed to keep the household running. The important part is to keep lines of communication open.

Ask for help and advice when you need it

We know it’s difficult and taboo to talk about money. That taboo won’t help you, so seek advice when you’re struggling. Talk to friends or family who are good with money and get their advice on what to do. They know you and may be able to offer specific advice tailored to you in a way that strangers on the Internet just can’t.

While thinking about money can be stressful, the best way to deal with it is to have a plan. Taking the time to make a budget and carefully manage household finances will save you a lot of headaches and stress in the long run.

Categories: Renters

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