Psychologists say that the financial issue is an important aspect of family life. Many married couples even divorce without reaching a common concept of budgeting. Today we will tell you how a budget shapes each family’s capabilities and where to start if your family is not used to keeping track of money.
Competent budget planning: a step-by-step guide
A few practical rules of family budget planning can serve as a rough guide to making decisions. You can also include payday loans with same day deposit in them but this is not particularly necessary.
Everyone’s situation is different and constantly changing, but the basic principles will serve as a good starting point. It is important to keep all accounting on paper, so you can clearly see the numbers.
Saving for the sake of saving and spending consciously are not the same thing. Think about what you would really like to buy and what you might have to give up to get it.
- the immediate goal could be to buy a new phone or pay back a small debt;
- in the medium term, you might consider buying a car or a trip to the seaside;
- long-term goals are usually related to paying the mortgage, securing your children’s future, or your own old age.
The main thing is to be realistic and not just set a goal but to confirm the possibility of achieving it with calculations.
Determine the income and expenses of the family budget
When analyzing the structure of the family budget, it is better to start with a list of all sources of income: wages, alimony, pensions, part-time jobs, and so on.
Divide spending into fixed and variable payments. Fill in the variable and fixed expense fields in the family budget table, based on your own experience.
The budget allocation should take into account family size, living conditions, and the desires of all members of the family.
As a rule, the income column includes:
- the salary of the head of the family (labeled “husband”);
- earnings of the head counselor (“wife”);
- interest on deposits;
- social benefits;
- part-time jobs (private lessons, for example).
Expenses are divided into fixed, that is, fixed payments on taxes, insurance of housing, automobile, and health, fixed amounts for Internet and TV. This also includes the 10-20% that must be set aside for contingencies and “rainy day.”
- medical care;
- car expenses;
- gas, light, and water bills;
- personal expenses of spouses (recorded and planned separately);
- seasonal expenses for gifts;
- school and kindergarten fees;
- child expenses.
Depending on your preference, you can supplement, refine, or shorten the list by consolidating and merging items.
Separate needs from wants
When people start writing down expenses, they find that a lot of money is spent on unnecessary things. Impulsive, unplanned expenditures seriously hit their pockets.
Reject a purchase if you’re not sure if the item is something you exclusively need. Wait a few weeks. If it turns out that you really can’t live without the desired thing, then it really is a necessary expense.
And it’s best to put aside credit and debit cards. Use cash to learn how to save. It’s psychologically easier to part with virtual amounts than it is to count off the paperwork.
Look at the categories of expenses you’d like to cut and make your own plan.
Many people don’t like the word “budget” because they think it means restrictions, deprivation, and lack of fun. But a personalized spending plan will allow you to live within your means, avoid stress and sleep better instead of pondering how to get out of debt.
Before you move forward, make sure your balance totals are positive or zero.
This method of budgeting is based on a simple principle: every month at least 10% of all family income should be set aside. Specialists advise you to do it not just for fun, but with a specific purpose: to buy a car, for repairs, for a vacation, etc. Setting a goal motivates you to be more conscious about your expenses, to get what you want faster. Of course, you can also use the deferred funds for other purposes, but only if unforeseen circumstances require you to spend a lot of money.
This is especially useful if you have working family members who get their paychecks in a bank account. It’s possible to get a separate card for savings and set up an automatic transfer of 10% or more of your income to it. It is better to keep such a card at home so that there is no way to spend money lying there on something insignificant.
Proper family budgeting allows you to use your income productively without exceeding your expenses. It is best to create an Excel spreadsheet to record income and all expenses. It can be printed out and duplicated in an app for your smartphone, which allows you to quickly track all expenses.
It is absolutely necessary to leave part of the income in the reserve fund in order to be able to finance unforeseen expenses. But you should not take out loans or debts, because it will not only not help the budget, but also worsen the financial condition of the family.
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