For many people, keeping a budget and sticking to it is primarily a constraint. Somewhere, actually, putting yourself in a barrier is a constraint. A bit like children who have rules to respect, it is ultimately to be freer.
The idea of budgeting is to be able to pay bills, put money aside and have fun without regret. Have you ever discovered that your account balance was close to zero without really knowing where your money was? By dint of small pleasures, we often end up finishing the month in the red. This is why budgeting is needed. Here we will discuss the ways and methods of preparing a family budget. Making a family budget may seem difficult, but as soon as the decision is made and the action started, everything seems easier. First of all, you have to download an excel file to be able to establish your budget.
You must list all of your expenses and your income
This is one of the most important steps when dealing with a budget. You must list all of your expenses: fixed, variable, exceptional expenses and your income.
- Incomes include wages, family allowances, alimony etc.
- Fixed expenses include children’s education, School Insurance, rent, internet, and phone bill, taxes etc. Variable expenses include gasoline, food, clothing, hobbies etc.
- Exceptional expenses include the extracurricular activity of your child, repair your car etc.
Put an order in your expenses
Once you have done this you will see more clearly about your expenses. You will be able to analyze all your expenses and to try to cut short on these. If you are wondering how you can reduce this type of expense, you can change housing and opt for a smaller area. For example, you can pick up your child at noon and feed him or her to avoid paying the canteen. You can also change the phone plan and take a low-cost package.
Operate by a budget envelope
You will budget your variable expenses, and determine an amount to allocate to them. For convenience, you can withdraw the cash and put in different envelopes by marking the type of expenses. By averaging your purchases from previous months you can determine the amount that will be allocated for each envelope.
Calculate your family budget
To calculate your family budget, nothing simpler is enough to make this formula: REVENUES – CHARGES = AVAILABLE BALANCE. Once this calculation is done, your balance is either positive or negative. If it is negative despite the fact that you have reviewed your expenses, you must increase your income. You can round up your ends of the month and multiply the sources of income in order to balance the accounts. If your balance is positive, you have saved money. These savings can be allocated to your projects, be available in case of a hard blow, or unforeseen expenses.
Save at the beginning of the month
The amount you decide to save every month must be withdrawn from your main account at the beginning of the month before even paying all your other expenses. Many of us work the other way around, that is, we save at the end of the month once everything has been paid and there is not much left. Remember that savings are the basis of good budget management. The more efficiently you manage your budget the more money you put aside and the more you can anticipate the different expenses. As a result, you will manage your budget even better and put more savings aside, this is called a virtuous circle. To determine the amount to be saved, set your goals according to your life plans: holidays, investments, child education etc. However, it is advisable to have precautionary savings, which it will serve in case of hard cost, unforeseen events.
Set up automatic transfers
Managing family accounts can quickly become tedious and without a minimum of organization, it can quickly become complicated. The best way to automate the management of your accounts is to set up automatic transfers for fixed expenses such as rent for example. Automatic transfers to the joint account must be scheduled on the same date. This will prevent you from digging your overdraft or juggling your savings.
Centralize your accounts in one place
To centralize your accounts it is advisable that you use an application that can synchronize multiple accounts. With these applications, you can have a view of all of your accounts, regardless of the bank. You will be able to create budgets for each expense item and you will be able to see them all together. These apps send you regular notifications to warn you that a big transfer has been made or just to give you your account balance. The goal is to make it easier for you to avoid logging into each of your bank accounts.
Look often at your accounts
Looking into your accounts often allows you to anticipate your next expenses based on your account balance. Anticipation is one of the bases of good family budget management.
Do not delegate all financial management to your spouse
Between a couple, there is necessarily one of the two who will take over the management of the family budget, but you still have to keep an eye on it. You have to make a point on your 2 ways to manage your budget and take the best of each.
Keep a budget for leisure
Do not put your entire leisure budget on the attached account. You must have your own money that you can spend as you see fit. This will help you to avoid being accountable for your expenses, and that will avoid any frustration on both sides.
Money does not make happiness, but it can sometimes give a big boost. You have to learn how to maximize each dollar raised by combining an income that is often highly variable with multiple consumer incentives. Establishing a budget is not as tedious as it seems and the result is always positive. This helps to achieve specific financial goals, target priorities, reduce stress, anticipate unexpected events and avoid the consequences of over-indebtedness.