How to Plan Your Home Budget

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Most people know that money runs out quickly. In other words, it simply disappears to nowhere. Sometimes it is difficult to memorize where we have spent a great amount. It is not usually clear where the money goes and why the salary ends in just a few weeks. It happens that we cannot save up for what we want to spend our money on. It’s high time to precisely calculate income and expenses. Making a home budget is the initial step to accomplishing our wishes.

Income & Home Budget

Many families shape their financial well-being by referring to their own situation. One can seek to earn more money than ever, another may insist on reasonable spending including all family members. And do not forget the loans that you or your family members could have taken to fill up the budget, such as payday loans online at Directloantransfer. Therefore, the main thing here is to find the right way to plan and keep the home budget. The issue is particularly important in the family with the appearance of kids. Thus, family expenses increase significantly but the home budget often remains stable. There are certain rules to plan a home budget with principles to adhere to.

First, determine the details of family income and expenses. Home income may include:

  • wages;
  • social payments;
  • bank deposits income;
  • renting an apartment income;
  • cash gifts;
  • part-time job.

The amounts of the current incomes are usually known. A source of the income part of the home budget is formed from them. Side jobs and cash gifts may be occasional. You do not need to count on them. Try to use the money as a bonus for pleasant spending.

Expenses & Home Budget

Next, calculate the expenses in some different ways. It is advisable to keep track of your expenses at least for several months on trifles. Only then it will be clear how much money family members spend and on what. To keep home budget records, finance experts recommend recording all the daily expenses including food, travel, or entertainment. Each of us needs to clearly plan expenses taken from the home budget.

Costs can be divided into several categories:

  •  obligatory expenses;
  • food, travel expenses;
  • spending on wardrobe renewal;
  • spending on entertainment, recreation;
  • unforeseen expenses for treatment, repairs, etc.

Mandatory payments include:

  • communal;
  • payment for mobile communications, Internet;
  • insurance;
  • payment for circles, sections, additional activities for children.

Food spending should also be categorized:

  • milk products;
  • cereals;
  • meat, fish, poultry;
  • vegetables;
  • fruits;
  • sweets, juices, pastries, etc.

Financial experts recommend making a spreadsheet in the first months of maintaining a home budget. They advise you to write down all the costs of food to the smallest detail. Sometimes, from such trifles as buying sweets, cookies, coffee, significant sums are accumulated in a week or a month. All family members need to learn how to memorize and write down their expenses. Therefore, later you can correctly plan your home budget.

Home Budget Income & Expense Comparison

Having calculated the income of the household budget, it is necessary to compare them with expenses. Most often, for people who are interested in home budget planning methods, the difference between income and spending is zero or they go to the “minus”. Therefore, they need to learn how to keep track of expenses and correctly draw up a home budget expenditure plan.

There are different methods and ways of how to properly plan your home budget for a month so that you have enough money for all the planned expenses. Still, you might have to postpone it for the desired purchases or travel.

10-20% Saving Method

One way to wisely spend on your home budget is called the “10 percent saving rule.” It consists of saving at least 10% of the total income every month. Personal finance experts advise you to immediately determine on what purposes you plan to spend these funds: a large purchase, a trip, a vacation. This will serve as an additional motivation not to spend the deferred funds. This will increase them and achieve what you want. In addition, the money would be a “financial cushion” in case of unforeseen circumstances.

The following method has worked well in cases where salaries are transferred to family members to a card account. It is recommended to make an additional bank card and issue an automatic transfer to it of 10 or 20% of the amount received on the day the funds were credited. It is better to keep an additional card at home to avoid the temptation to spend money from it. This method of planning a household budget benefits all family members.

How to Effectively Manage Your Home Budget?

Planning a home budget implies a clear understanding of the main directions of its distribution and strict control of all expenses. You can plan a home budget, keep track of income and expenses as in an old-fashioned way in a specially dedicated notebook. Write everything down manually or with the help of modern computer technologies.

The easiest way to create a family budget table is in Microsoft Excel. In one half of the sheet, you can write down all household income, and in the other, you can record current expenses. At the end of each week, you need to sum up the total amount of expenses. At the end of the month, you need to analyze what the funds were spent on and how you can reduce these costs. Such a table clearly shows how much money is spent on sweets, other “snacks”, and how much money is spent on healthy food.