There are two ways to be comfortable: raising one’s income to one’s desires or lowering one’s desires to one’s income.
Rising prices, removal of subsidies to necessities, lower purchasing power, you know his enemies of the family budget. Is it possible in this situation to manage family expenses without keeping a budget?
The answer depends on the goals if you want:
Get out of debt and save;
Identify waste and unnecessary expenses;
Prepare your future, that of your children, of the family;
Plan the purchase of appliances or furniture without getting into debt;
Forecast high spending periods;
Track bills to pay: water, electricity, telephone, schooling;
Adjust expenses according to cash inflow;
Understand, manage, improve your finances;
Plan your expenses, your income, your savings…
So, you have to keep a budget.
Imagine that tomorrow you can establish an annual budget.
How to calculate the family budget?
It takes a minimum of rigor and regularity to establish and monitor a budget. But it’s not difficult to do. With the help of a spreadsheet – Excel or Open Office Calc which is free: to download here – half an hour to an hour a day is more than enough. If you’re not a computer fan, a sheet of paper, a pencil, a ruler, an eraser, will do the trick.
A. Define the family budget as the total household income and expenditure. The goal is to forecast and balance revenue and expenditures, or even better to have savings after meeting needs.
B. The elements of the budget:
The budget will be annual for a better forecast and a more global view. It breaks down into:
They include all receipts received by the family: net wages, social income (family allowance), bank overdraft, advance and down payment, bank loan, interest, and dividend, etc.
They will be split into:
Fixed charges :
Expenditure whose amount is fixed or varies very little and to be paid only once every month such as rent, electricity, water, telephone, housewife, schooling, subscriptions (television, insurance …), contributions paid to associations;
We can mention food, house maintenance, health expenses, transportation, hygiene, leisure …
Like repairs, the purchase of new furniture or household appliances, gifts, travel expenses …
Make an Excel file for calculating the family budget worksheet at the end of the article and complete it with your data.
What to do to fight against waste and get out of debt:
The subtraction of the expenses from the amount of the revenues makes it possible to draw:
a Positive balance: in this case, you have a savings capacity since your income is greater than your expenses. Beware of new needs that may eat away at this savings and your financial peace;
Negative balance: You need to find resources to finance this gap between expenses and revenues. Other solutions consist of:
favor fixed costs and defer occasional expenses,
spread out the expenses in the month,
wait for suppliers by installments and request a deadline for the balance, etc.