The task of planning your family budget is not a simple summation of income and expenses. It is necessary to analyze the results and draw conclusions.
Some people associate the meaning of budgeting purely with saving, which is perceived very negatively. As it is something shameful. Or they think that the budget-making is required only by those who have little money. In fact, everyone needs budget planning. Both those who do not have enough money, and those who have big bucks.
Proper family budgeting helps to improve the quality of life, cause competent financial management allows you to benefit more with the same earnings.
What is it and why is it needed?
The family budget is a financial plan including items of revenues and expenditures.
Managing the family budget will allow any family to gain financial independence, first of all, from their addictions and waste of money. Even people with good incomes sometimes face the problem of money shortage. No sooner have they received a paycheck than money disappeared into spontaneous purchases. At the same time, the necessary purchases have not been made in full, the current month is not over, and the monetary deficit is already growing.
The idea of budget-making is to regulate your family’s expenses, achieve the set long-term goals (your own house, car, college, retirement, vacation), reduce unplanned and needless costs, plan ahead, and formate financial discipline. Ultimately, you will have an idea of how much money you have and what you spend it on.
Types of expenses
All our expenses can be separated into two groups.
- Fixed costs. For instance, your loan payments, rent or utilities, cable TV and internet, and etc. Generally, these costs are principal and don’t change.
- Variable costs. The expenses can vary from time to time (such as nutrition, gasoline, entertainment, and gifts).
How to make your family budget
Budgeting is not the most exciting thing in the world, but essential.
1) First, you need to get a clear idea of your earnings. List all of your sources of income, both primary and secondary.
2) Make a list of the expenses you are planning for a month and year.
3) Calculate your monthly income and monthly costs. If income exceeds expenses, as a result, you are on the right track. If the situation is inverse, then you need to point out variable costs with an eye to find items for reduction.
4) Take as a rule to always monitor your family budget. When the first 30 days will have passed, look through and compare your actual and planned spendings.
- Write down carefully all your expenses for a month. After reconsidering these expenditures, it will become clear which costs can be cut and what sum can be put aside for a trip or a big buy.
- Don’t try to tighten your belts. Never skimp on food, recreation, and education.
- Get the support of all relatives and your family members. You must be one team.
- Plan all your purchases. This applies to major buyings, as well as small items such as basic household products.
- Keep a certain amount for contingencies. You should not go crazy on savings and give up entertainment and cafes. Moderation should be in all things.
- Set yourself a goal. Family budgeting may appear to be monotonous and tiresome. But it will be easier to calculate costs if you have a goal (purchasing a house, a vehicle, leave money for your kid’s education). However, if you find that you do not have enough patience to save up, then perhaps you should consider a bank loan option or search for information on cash advance online.
The point is that the budget-making process is needed not to save money, but to control everything. It helps you avoid spontaneous purchases and not to spend more than you have. There should be order in all things. Then it will be easier to set goals for yourself and achieve them. Budgeting helps you allocate funds more efficiently. You can keep records in one of the ways – in specialized applications, programs, in Excel spreadsheets on a computer or online. It is enough to determine the most convenient option for yourself. Good luck!