Budget book: What it is and why you should keep one

Here an online order, there a visit to a restaurant and then there is an insurance premium that is deducted from the account – at the end of the month the account is empty again. Now let’s cut the bait: do you know exactly what you’re spending your money on?

One reason why people are chronically broke and unable to save money is that many people don’t have track of their spending. The first step to the solution is easy and you only need a piece of paper and a pen. You can plan your finances with a household book.

Definition: This is a budget book

In a household book, also known as a budget planner or “money diary”, you list your income and expenses. With the help of the income-expenditure overview you can find out what you are spending too much money on and where you can save. With the help of a household book, you can plan your budget and thus create reserves for emergencies.

How do I keep a budget?

To start listing your budget, you should first have bank statements, contracts, and insurance documents ready. You also need something to write with. For example, you can create an Excel list on your computer or make handwritten notes. You can find ready-made lists to fill out at the Consumer Center. There are also various household book apps that you can load onto your cell phone.

What belongs in a household book?

First you should have your regular income write down. This includes the income that ends up in your account every month, such as wages, child benefit and unemployment benefits. Monetary gifts or one-off payments such as bonuses are not included.

Next you should get yours regular expenses determine. Rent is regularly deducted from your account. The costs for electricity and gas, telephone and internet, insurance and contributions for your hobbies also belong in the list. In addition, there are installment payments for loans. If a contribution is only made once a year, for example for car insurance, you should divide it by twelve and also include it in the list of expenses.

yours monthly available budget is what you get when you subtract regular expenses from income. Income should exceed expenses. If this is not the case, you should initiate savings measures and possibly consult a debt counselor.

In your household book, you should also note the expenses that are not fixed. To determine which variable expenses you have every month, you can look at your bank statements and collect purchase receipts. Don’t forget small amounts either. To get a better overview, you should divide the expenses into categories such as food, household, clothing and leisure.

If you subtract the variable expenses from your monthly available budget, you get the amount that you monthly return can. This is the amount that is available to you in the long term for larger purchases, as a nest egg and for saving.

With the household book you don’t automatically save money – but you get an overview

It costs nothing to keep a budget and it makes sense to get an overview of your budget. This is the best way to divide up your money every month. Keeping a household book does not mean that you automatically have more money available. However, you can see what you are spending a lot of money on and take countermeasures.

You can read examples of how you can get started with a household book here:

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Since I started keeping a household book, I was able to reduce my expenses by 20 percent – and now invest money in ETFs

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I kept a budget book retrospectively for two months and saw that I could invest more than I thought — that’s what I did

The two Business Insider editors Leo Ginsburg and Amin Al Magrebi kept a budget and documented their experiences. The result in both cases: They were able to reduce their expenses and are now saving more money than before.

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