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Apr 08

How to manage a family budget: 10 main principles

Reading Time: 3 mins

Managing a family budget can sometimes be very difficult. You don’t have enough for something, there are unaccounted expenses, and so on. In this article, Telecomasia.net explains 10 principles to help you manage your budget.

  1. Record all income and expenses daily, choosing the method that is most convenient for you. You can write everything down in a notebook, in a spreadsheet (for example, Excel), or keep records through online services and smartphone applications. Choose the option that will not cause discomfort. In a month, you will have data to analyze.
  2. Analysis, control and optimization. Sometimes the picture that emerges from recording your spending and receipts makes even those who thought they had everything under control wonder. The truth is that you can’t control absolutely everything, but you can at least cut back to some extent on credit card spending, if you have one, or avoid making rash purchases. Do you spend a lot of money on trips to cafés or food deliveries from restaurants? Why not start going to less well-known but cheaper establishments or cook your dinners?
  3. Determine which method of family bookkeeping is closer to you: joint (the money of all family members is added together), separate (for example, someone pays for utilities, and someone for food) or share (everyone contributes a certain percentage of their income, and spends the rest at his discretion).
  4. Set goals for the whole family. When there is no unity in plans and aspirations, there is thoughtless shopping, buying another unnecessary gadget, spontaneous fishing trips with friends and other expenses. If there is a clear goal, then there are means to achieve it! Think and discuss what you want together.
  5. Determine your priorities. Rank the purchases and expenditures to be made in order of priority and importance. The Eisenhower matrix, which is most commonly used in time management, can help, but can also be used successfully in other areas of life, such as financial planning. Divide your future expenses into four groups.
  • Important and urgent. These are things that cannot be put off: paying utility bills, buying life-saving drugs.
  • Important but not urgent. That’s what careful planning is needed for: buying a new car, buying a house, and so on.
  • Urgent but not important. For example, you were walking through a mall and saw a stunning dress on sale, which will be the tenth in your closet. It seems like buying a dress is not a necessity, but the sale will end in a couple of days, and this fact spurs you to spend money.
  • Not urgent or important. This includes things that would please you, but are not essential. For example, go to the movies, buy a smartphone that you saw in an advertisement, jump with a parachute, and so on. Such things should not be excluded from your life, you just need to spend money on them wisely.
  1. Motivate yourself. At the beginning of the journey, it’s always difficult, since you still do not see any real results, and therefore sometimes it will seem to you that maintaining a family budget is complete nonsense. But in a month you will be able to appreciate the fruits of your labors and will be grateful to yourself for the work done. Not to quit what you started, we suggest that you often think and talk about your goals, about why you are doing all this.
  2. Calculate your savings. They need to be kept separately. A savings account, for example, would work. At the same time, it is good to save 10 or 15% of income. This money will be your safety cushion or a start to make your dreams come true. In no case should you spend them on debt coverage or the purchase of new household appliances.
  3. Open multiple savings accounts according to your goals. Top up these accounts as soon as your funds become available. Even if it’s $10 a month at first, you’ll be spending much more in a year as you’ll learn to spend wisely.
  4. Plan your expenses. This can be done when you analyze income and expenses for a month. The plan will help you know exactly how much is needed to cover each cost category. You can practice by making a plan for the next month, and then for six months and a year. There are also very organized people. If you are one of them, go for it. You can plan immediately for a year.
  5. Plan for entertainment and pampering. If you turn life into hardships, you will soon be sick of budgeting and planning, so you will just give up. Rest is also necessary and important.

By following these principles, you can effectively manage your family budget, plan expenses and achieve financial goals.

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