Learn How to Prepare your Family Budget in Five Simple Steps
Like everything in life, personal finances require a certain order to prevent imbalances that result in serious economic problems. What can we do about it? A simple way of avoiding economic trouble is developing a family budget to order our finances.
We will explain how to properly manage your personal finances to avoid economic problems.
Here’s five specific steps to structure a family monthly budget:
1) Find a good tool: The work begins by choosing a tool where all necessary data will be recorded. This tool can be from a notebook, booklet or even an excel page. Just remember that this tool should be available at all times so that you can make revisions and registrations.
2) Record the information: The tool should record all information of our expenditure and revenue within a month. It is therefore desirable to have two columns to indicate in each data corresponding. Before making entries, take the time to make it as accurate as possible.
3) Identify revenue: It is important to register your income. You need to know your fixed income (salary, retirement pension, cash for other income) and variable incomes (overtime, commissions, prizes, investments, independent works, collaborations, etc.). This will allow you to get a more accurate idea of how much money you actually gain in your work or business.
4) Identify expenditures: The idea is that you write your fixed expenses (rent or mortgage, utilities, school tuition, home, vehicle tax, transportation and gasoline taxes, credit cards), but also – and most accurate form – your variable expenses (food, toiletries and cleaning, useful study) and your expenses extra (gifts, travel, holidays, cinemas, outputs, leisure, entertainment, etc.). If you make this a routine, you can actually see your level of spending.
5) Manage your budget: Once you have numbers in your income and expenses, you have to make a balance. If your expenses exceed your income, you are in red, in deficit, so you have to make a cut in variable costs or extras or raise revenues to balance your finances. However, if the balance indicates the opposite to this first situation, the remaining money in revenue can – and must be savings (between 5% and 10% of your salary) that will serve you well for future investments.
We hope our tips on your family budget helped you. Tell us in the comments below.