There is nothing complicated about how to manage a family budget. You have the total family income, which consists of the money earned by the husband and wife, as well as all kinds of bonuses, cash gifts, interest on deposits and other sources of income.
Credits, loans, borrowed money are not family income! They can form the family’s property, for example, in the form of large purchases, but these are not incomes.
In addition, you have expenses that can be divided into mandatory, optional and unplanned.
So, we calculate the family income for the month. Now we summarize all mandatory payments: utilities, loan payments, tuition or kindergarten fees, and so on. Now we subtract this amount from the income item and get the remainder. The rest also needs to be planned. This amount should be distributed among the following main items of expenditure:
- Buying food (spending is not obligatory, but not fixed).
- Household purchases (clothing, household items, small and large appliances, etc., etc.).
- Emergency reserve – money set aside for a “rainy day” (as a rule, a fixed amount that lies until this very day, and is replenished if necessary).
- Means of accumulation (composed of saved money and unplanned income: bonuses, part-time work; planned for the purchase of expensive purchases, holidays and recreation).
- Spending on yourself (includes any expenses that make life more pleasant and interesting).
Naturally, the lion’s share of your expenses will be the purchase of food and household items. In general, economists advise distributing family income as follows: 50% – necessary needs, 30% – optional, but desirable expenses, 20% – emergency reserves or funds for accumulation.
Means of accumulation can also be regular income received from bank deposits and investments in certain types of bonds.
For example, if you have a large deposit, and you receive interest on it every month, such income will already be a constant value in the structure of the family budget.
How to plan and account for expenses?
Divide all income in half. One half of the budget should go to mandatory payments and essential food. The amount of mandatory payments should be planned by you from the very beginning and immediately deducted from this half. In addition to rent and loan payments, enter in this expense item, for example, the payment for a garage or a summer house, a children’s music school (sports section) or a kindergarten, Internet payments and funds put on a mobile phone account. That is, this article includes all payments that you simply must make.
If the amount of payments exceeds half of your family budget, then you will have to plan new opportunities to increase income or reduce the amount of these payments (registration of subsidies for rent, for example). Although in this case, most likely, you will have to save on food or other purchases. The rest of the first half of the budget will be the food item.
Divide food expenses by week. This includes the money needed for lunch at work or school, as well as for pet food (they are also family members). With proper management of the family budget, you should not spend more money on food than planned. If at the end of the week there is money left on this expense item, then you can add the balance to the next week’s amount (and allow yourself something extra) or attribute it to NC or to savings.
Spending on the necessary household trifles should also be planned (those same thirty percent). Consider all purchases, all the money spent on travel, going to a cafe or going to a pool or a hairdresser, the cost of purchased medicines. Again, competent home accounting will allow you to plan and spend money on this expense item in proportion to income.
The emergency reserve and means of accumulation are the money that you have left after paying for all services, buying food, clothes and household items. What if there is no money left? This should be. After all, you plan your family budget, distributing expenses according to income. This is the main advantage of the planned family economy. By the way, you can replenish these items of expenditure thanks to competent and painless savings.