• Everyone has recurring expenses such as mortgage payments, car loan payments and groceries. Most people also spend money on smaller purchases and entertainment throughout the month. Creating a monthly household budget to account for all these items will help you take better control of your finances.
  
  

Monthly Income

• Determining how much income you have each month is a fundamental step to creating a household budget. You should include your net income for the month, as well as any other revenue sources you have such as alimony, child support, stock dividend payments or interest income. Total all incoming funds for the month to determine how much you have to spend on expenses.
  
  

Recurring Payments

• Recurring payments consist of everything you pay on a monthly basis to maintain your home and vehicles. For example, your rent, mortgage payment, homeowner's insurance and property taxes fall under recurring home expenses. Car insurance and loan payments fall under recurring vehicle expenses. If you have children in daycare, the monthly daycare fee also falls in the recurring payments category. In addition, you may want to set aside a portion of your income to put towards savings every month.
  
  You can save money in this category by shopping around for cheaper insurance options. Insurance premiums can vary by hundreds of dollars between providers.
  
  

Living Expenses

• Necessary expenses such as the cost of filling up your gas tank, utility bills, groceries and household items are considered living expenses. Childcare and pet expenses fall into this category as well. You may also want to account for clothing, haircuts, vet bills, or anything else you find you need on a regular basis.
  
  You can save money in this category by cutting down on your food budget. Clip coupons from the newspaper or print them online and check with your local grocery store to see if they offer a double or triple coupon day. You can reduce your utility bills by purchasing Energy Star appliances, which have a much lower output each month. Replacing the light bulbs in your home with low output CFL light bulbs will also help save money each month.
  
  

Discretionary Expenses

• Discretionary expenses include everything you purchase beyond necessities, mostly for entertainment. You likely have some recurring discretionary expenses such as internet service, cable television or gym memberships. You will also have periodic expenses such as the cost of dining out, seeing a movie or purchasing luxury items like DVDs and video games. You can determine how much you spend on discretionary items by reviewing previous bank statements and credit card bills and totaling non-essential items.
  
  You can save money on discretionary expenses by simply cutting back. For example, limiting the nights you eat at a restaurant to one or two times a week will save money. You can also cancel subscription services you do not regularly use such as the gym, movie subscriptions or magazines.