How to budget for household expenses

Developing a household budget takes some work, but it’s always a good idea to dive into your spending habits to see where you could save some cash. Read our tips on budgeting for household expenses.

4 min read

Whether you’re flying solo, living with a flatmate or significant other, or managing a houseful of kids, household expenses likely constitute the majority of your everyday spending. And, between groceries, utilities, and rent or mortgage payments, it can be hard to find ways to cut back on costs. Yet with a little discipline and some smart saving tips, nearly everyone can reduce their spending, and free up some hard-earned money for other financial goals. Read on to discover our tips for conquering your monthly expenses.

How to manage your monthly expenses 

Your average monthly expenses depend on a lot of factors, including where you live, the size of your household, your job status, individual taste, and lifestyle. No matter what your monthly expenses are, follow these steps to get a better picture of where your money is going and what opportunities you have to save.

1. Track your household expenses 

While some household expenses might seem small, they can really add up over time. To get an idea of what your costs are, start tracking your spending for a month or two. Note large payments such as rent, insurance, and utilities, but also non-necessities like shopping and takeout. This gives you a birds-eye view of what you’re spending each month on average. If this sounds like too much work, try opening a bank account that offers automatic spending categorization to simplify the process. 

2. Identify opportunities for saving

After determining what your costs are, it’s time to examine them carefully. Cutting back on household expenses isn’t always realistic, or even necessary. However, most of us can find ways to save if we look close enough. Perhaps there are heating or internet providers who offer better rates than your current one. Do you buy a coffee-to-go every day? Try bringing one from home instead. Remember—5 or 10 euro here and there may not seem like a lot, but those savings could add up to hundreds of euros over the course of a year.  

3. Map out your savings objectives

Once you’ve identified your household expenses, make a plan for what you want to save for. Maybe you’re planning on moving, or want to invest more money into your retirement account. Or perhaps you just want to save up for a nice vacation. Alternatively, you can split your savings between all sorts of goals with the help of digital savings features. When you have your savings goal all mapped out, it becomes much easier to stay on track. 

4. Prioritize paying off debt

When identifying your monthly expenses and opportunities for saving, it’s always important to prioritize paying off debt where possible. Debt can be a burden, saddling you with unwanted stress and anxiety. Cutting costs where possible and putting that cash toward outstanding debt can reduce interest costs in the long term. 

5. Save up for a rainy day 

Whatever the weather, it’s always a good idea to have an emergency fund. Though it’s not something most of us want to think about, unexpected events like emergency car repairs, or being laid off can hit you like a ton of bricks, so it’s smart to have a backup plan. How much should you save? Many experts agree that it’s a good idea to save up three months of living expenses for when times get tough. Need tips on saving in hard times? Learn more here. 

Top budgeting tips

Whether you’re looking to cut costs dramatically or simply want to get your finances in order, there are tons of tricks to help you control your monthly household expenses.  Here are our favorites: 

  • Use budgeting apps and tools—Downloading budgeting apps can streamline your savings goals instantly. This might mean signing up for a bank that offers real-time push-notifications for every transaction, setting automatic transfers for specific targets, or logging your monthly household expenses manually or in your banking app. Need some help choosing the right app? Discover our recommended budgeting apps here..

  • Use the 50/30/20 split—For household expenses, consider the 50/30/20 ratio, where 50% of funds go to your essentials, 30% of funds go to fun and leisure, and the remaining 20% goes into your savings. If doing this monthly calculation sounds like too much unnecessary math, choose a bank account with designated sub-accounts and automatic transfers. This way, your bank can do the heavy lifting while you sit back and save. 

  • Rethink your spending—If you know where you’d like to cut costs, great. If not, check out the chart below for some ideas on where and how you might be able to reduce household expenses.

Remember, a budget isn’t strict, you can always adjust it where needed. The key to any household savings strategy is making it work for you and your budget. 


Your money at N26

From solo living to cohabiting, balancing your household budget is easier with N26. Open an N26 Smart account in 8 minutes and categorize your expenses automatically with Statistics. This feature tracks your spending, including household expenses, so you always know what money is coming in and going out.

For hassle-free saving, our premium accounts offer N26 Spaces sub-accounts. Get up to 10 spaces and easily separate your monthly budget and your other saving goals. Set targets for each space to stay focused, and organize automatic transfers with the rules feature from your main account. Need to split costs with housemates? Use Shared Spaces  to manage money and set aside funds together with the rest of your household. 

What are the most common household expenses?

Key household expenses include housing payments, groceries, transportation, utilities, childcare, petcare, insurance policies, healthcare, internet and phone bills, taxes, and loan or debt repayments. On top of this come the non-essentials like gym memberships, shopping, home decor, and entertainment.

How can I cut back on household expenses?

Most of us have areas where we can save some extra cash. The key is looking closely at where you’re spending money and thinking through where you can cut back. Depending on your situation, this might mean saving where you can on groceries and household items, or making larger cutbacks like canceling gym memberships or moving into a smaller apartment or house.

What resources can help me with household expenses and savings?

There are lots of great budgeting apps and digital tools that make budgeting easy. Some bank accounts come with automatic saving features along with spending categorization, so you can see what you’re spending every month and automate your budget. Lastly, try using the 50/30/20 rule to allocate a percentage of funds to necessities, fun, and savings.

Why should an emergency savings fund be integrated into my household expenses?

When the unexpected happens, it’s good to have a backup plan. Having a rainy-day fund can help you be prepared for an unplanned event, such as an unforeseen medical expense, emergency home repairs, or a period of unemployment. Having the extra cash stowed away will give you the peace of mind that you’re prepared no matter what.

What budgeting tools does N26 offer for household expenses?

N26 offers a great variety of saving and budgeting features to help you manage your household expenses. Try Statistics to get insights into your spending behavior, and get real-time push notifications so you alway know what’s happening on your account. Our premium accounts offer Spaces sub-accounts to organize your savings goals. Budget with family, friends, and roommates using Shared Spaces, and use our Rules or Round-Ups features to save with regular transfers.

By N26

The Mobile Bank

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