Top 10 Household Expenses to Consider When Creating Your Family Budget

The largest chunk of a family’s budget typically goes toward housing and household expenses, according to QuickBooks. Covering such big costs every month can be overwhelming, but building a solid budget for your household expenses can help you feel prepared and less stressed. 

Average Household Expenses

In 2023, housing is the largest expense most families face, comprising 25-35% of their budget. Utilities are estimated to take up another 5-10%, food an additional 10-15%, and insurance claims 10-25% of the average family’s budget. 

These numbers give us a good range for household expenses. They also give us some perspective on how much our household expenses impact our budgets. 

Some household expenses we have control over, but others are determined by where we live and our individual needs. No matter your living situation, one thing is clear, it’s important to take household expenses into consideration when building your family’s budget. 

There are so many different expenses that could be considered household expenses. Often these expenses are seen as costs directly related to housing and keeping a home operational. 

Let’s look at the top 10 household expenses to consider when creating your family budget. Keeping these expenses in mind will help you get clear on what you can afford and where your household funds are best spent.

Expense #1: Rent/Mortgage 

One of the most important and often the largest household expenses to factor in when creating your family budget is the actual cost of putting a roof over your head. Typically, this cost will be your rent or mortgage. This should be factored into your budget first so you can be sure there is enough money each month to pay for it. 

Often it’s recommended that your rent or mortgage not be more than 30% of your monthly income. Of course, in some circumstances, like if you live in a high-cost-of-living area, that may not be possible. It’s important not to get hung up on the numbers but instead to be sure you can comfortably afford your rent or mortgage.

Expense #2: Insurance

Another household expense you want to be sure to factor in is insurance. If you own a home and have a mortgage, your homeowner’s insurance will likely be included in your monthly mortgage payment. But if it isn’t, or if you rent, you’ll want to budget for homeowners or renters insurance to be sure your home and belongings are adequately protected.

Expense #3: Property Taxes

Property taxes are another cost of homeownership that can get overlooked. Like insurance premiums, property taxes are often included in mortgage payments. But, if yours aren’t, you’ll want to be sure to consider your property tax payments in your family’s household budget. Having infrequent expenses like property taxes included in your budget can help you plan and be ready to pay them when they are due.

Expense #4: Electricity Bill

Your rent or mortgage, insurance, and property tax are often the biggest household expenses you need to consider when setting up your family budget. But there are other expenses you’ll want to be sure to include as well. 

One of these is the electricity bill for your home. Factoring in your electricity bill will help you keep the lights on and the heat or air conditioning running. 

One thing about your electricity bill is it might vary widely from season to season. This can be hard to budget for because you aren’t sure of the exact cost you’ll face. 

If this is a situation you’re dealing with, reach out to the power company in your area to see if they offer budget billing. With budget billing, you’re typically charged the same amount every month. This is because your utility company uses an average for your usage based on what you’ve used in the past. The average is updated over time to reflect current usage. But each month you’ll pay the same amount. This can be helpful because it can remove some of the guesswork from your budget.

Expense #5: Water and Sewer Bills

Like your electricity bill, you’ll want to factor your water and sewer bills into your family’s household budget. 

These are key bills that will help keep things running smoothly at home. Like our electricity bill, your water and sewer bills could vary from month to month based on use. 

If your water and sewer companies offer budget billing, and you’d like to take some of the variability out of your budget, see if you’re eligible and sign up.

Expense #6: Maintenance Costs and Upkeep

When creating your family budget, it can be easy to focus on costs you know you must face and overlook costs that may or may not happen. This can be disastrous for your budget in the long run. 

To avoid this when you’re building your budget, be sure to factor in the cost of maintaining your home. You can do this by setting aside a certain amount each month to have available when these expenses arise.

Expense #7: HOA Fees

Another cost you may face as a homeowner is your HOA Fee (Homeowners Association). These are fees you may be required to pay monthly, quarterly, or annually to your Homeowners Association. Typically, these fees help take care of maintenance and upkeep on common areas. Including these expenses in your household budget can keep them from sneaking up on you.

Expense #8: Internet

There was a time when the internet might not have been considered an essential household expense. But now, for most people, it’s a necessity. 

Including your internet in your family’s budget can help you be sure you’re getting this service at a good price. Most areas have many different choices in terms of providers so as you consider internet in your budget, be sure you’re finding a provider that offers the service you need at a price you can afford.

Expense #9: Groceries

While food spending can come in many different categories in your budget, groceries are essential to your household budget. 

Typically, the groceries you buy are prepared and consumed at home. So, including them in your household budget makes sense. It’s also important to include them in your household budget because doing so ensures that even if you can’t afford to eat out, you have food at home to feed your family. 

Sometimes it can be tough to budget for groceries because the prices vary over time. To find a good estimate for this spending category, find your average grocery spending over the past three to six months and use that as your target.

Expense #10: Household Essentials

The final household expenses to consider when creating your family budget are household essentials. These expenses include cleaning products, paper goods (toilet paper and paper towels), garbage bags, and any other household items that you must buy to keep your home functioning smoothly. 

It’s essential to consider these expenses in your budget because they’re things you know you’ll need. You may not need to buy them monthly depending on your situation, but allowing space in your budget for these items will help you be prepared for things as they come up.

A Few Things to Keep in Mind

As you’re creating your family budget, it can be tricky to know how much you should plan for in different areas of household spending. 

To get a good idea of what to plan for, look at your past household spending. This can give you a baseline to start from as you create your family budget. 

If some of your bills vary over time and are difficult for you to factor in, see if budget billing or similar plans are available so you can pay the same amount each month. 

For other variable or less frequent household bills, you could consider creating a sinking fund. 

To do this, look at the less frequent bills and maintenance fees you pay, like property taxes, insurance premiums, annual upkeep and maintenance costs, and HOA Fees (if not paid monthly). Divide each bill or expected cost by 12 to find out how much you need to save each month. Add up all these monthly amounts. This is the amount you need to save towards these expenses each month. Setting this money aside each month will help you be better prepared when the expenses come up. It can also help remove some of the variability from your budget. 

If you have expenses in your household budget that aren’t discussed on this list, add them to make the list more complete for your situation. 

The goal of considering these household expenses as you create your family budget is to help you think through the expenses you face and be prepared for them. And if you can do that, you’ll have less money stress and feel better prepared to tackle what life throws your way.