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How to Plan a Family Budget


How to Plan a Family Budget

Sometimes, almost every family faces financial difficulties and the necessity of creating a family budget. It’s clear that if you manage the funds properly, you will be able to avoid such challenges. Evemake their dreams come true. Household financial management is not the easiest task. After all, you need to take into account the needs of all family members. Therefore, there may be disagreements. However, when planning at least the average family budget, you can improve financial discipline, control your funds better and use money more efficiently. For example, you can quickly pay off debts, if any and make savings. As a result, the financial condition of the family can signifryone wants to know how to stop living from paycheck to paycheck and icantly improve, and you will get closer to your dream.

How to Plan a Family Budget

How to create a family budget?

Before proceeding to the planning of the family budget, you should clearly understand that the thrifty attitude to your financial means has nothing to do with stinginess and rejection of all pleasures in life. Very often, there is a situation when the whole family aims at fulfilling a certain task, for example, to buy a new car, a house in the suburbs, etc. and all family members are disadvantaged because they deny themselves everything. As a result, the achieved goal will not bring the expected pleasure. So, bear in mind the following tips to create a family budget for a month and simplify your life in some way.

Assess your financial situation.

It is best if all members of the family participate in the planning process. If only one person acts as the manager of the family budget, the rest should trust them unconditionally.

When you decide to create a budget, the first thing you should do is to realize your capacities. Run a background check on your credit cards, debts as well as money hidden in a cookie jar and any other sources of revenue.

In addition, you should watch all your costs at least for one month to see the whole picture and understand where the money is going.

You should watch both the cash and credit card expenses. Each type of spending must be put in a certain category. To record costs and incomes, you can use a simple family budget planner or a special budgeting software.

Identify your priorities.

Making a budget, you will have to make a choice. You should identify your priority needs and financial targets. Only then you can think about the budget for your entertainment and other "very important things" without which you cannot imagine your life. The latter should immediately be divided into three categories: family expenses, child expenses (if you have kids, of course), spouses’ personal expenses. You should separately plan each of the categories, optimizing the cost in terms of importance and urgency.

You should make an inventory of needs and wishes, given their importance to you. At the very top should be food, utilities, clothes, money for gasoline and other such things. It is important to really assess the needs.

Nonetheless, pay attention to the fact that it’s only about healthy food. Junk food is not a necessity as well as visits to a restaurant on an ongoing basis. Besides, you can cut your checks in grocery stores by preparing healthy lunches and dinners at home.

You have many needs, which, in fact, are just your whims. Some financial analysts believe that people are wasting about 17% of their monthly incomes. For example, they take a coffee to go and cookies every morning instead of having breakfast at home.

Even a simple family budget will help you make better use of money and establish a better financial situation.

Make improvements in your future budget.

Most likely, you have coped with budgeting. It's great. However, there is the other side of the coin: your budget might be wrong.

You might have overestimated your costs for some categories and underestimated others. Do not worry. The more time you stick to the budget, the better you understand how much money you waste in all categories.

After you have made the budget, you shouldn’t preserve it. Think of the budget as a moving life-form. Every day of your life does not look like another one. You will have new financial needs and desires every month. For example, this month, you need to spend money on new clothes or a new sofa. You must continue to monitor and adjust your budget in accordance with the changes in your life.

Save money automatically.

If you have a saving money issue, the best way to deal with it is to do it automatically. You can make an automatic transfer of a given amount of money to your savings account. This is a great way to avoid unwanted spending.

You can set the time of the planned transfer to make it as convenient as possible. However, the best time for such manipulations is the same period when you get an inflow of money, it can be salary, for example, or something alike. When you transfer money to a savings account, you reduce the possibility of wasting it. You can use a family budget calculator to determine the amount of money, which you can deposit without strong discomfort.

Create a rainy-day fund.

How to make a family budget? Almost all the people do the same big mistake when making a family budget: they don’t save up in reserve for emergencies. Since you cannot foresee the future events, it is quite difficult to create a separate line item in the budget for it.

However, you never know when something goes wrong with your car. An emergency fund will allow you to have extra money to cover the unexpected costs.

Majority of financial experts believe that a rainy-day fund should be about 4 monthly salaries, and this amount will help cope with financial unpleasant surprises. It is worth creating a separate account for such a fund in order not to spend it accidentally or intentionally.

Take into account annual or semi-annual costs.

It is quite easy to make recurring payments, especially if you use budgeting software. You pay for electricity, heat, water or gasoline every month, and you will hardly forget about them. Nonetheless, you should also remember about those payments, which you make once or twice a year. It’s about, for example, car and medical insurance, membership dues, etc.

If you have such objects of expenditure, you should add them to your list of expenses and make monthly deductions. If you pay for car insurance twice a year, then divide this amount into six and start saving it every month.

Best family budget apps.

It is quite easy to watch personal incomes and expenses, but the family budget is real accountancy, in which you need to consider all sources of income and interests of everyone. You cannot do without the best family budget software.

For effective use, the best family budget app must be multi-user and suitable for different operating systems, so that each member of the family can make changes in real time. However, usually, developers offer to pay for the possibility of access to several people.

Splittable.

This application has been created specifically for people who rent an apartment together or divide the cost of maintaining a household with other family members. Using it, you can easily understand who pays for utilities, how much money each of you has spent on purchasing products and other common needs. Splittable will bring order to your overall expenses, and it will help avoid unnecessary disputes and grievances with your spouse.

CoinKeeper.

The main benefit of this family budget software is an intuitive and handy interface with many informative icons. Inter alia, CoinKeeper provides you with a possibility to instantly fix your expenses, set up financial goals, set a budget and plan costs. The given tables and charts make the process of controlling the dynamics of funds very easy.

However, you will be able to enjoy advanced reports, cloud data synchronization, co-management of the budget and many other functions only after subscription.

Debit & Credit.

It might be the easiest finance manager. The interface is very minimalistic, everything is simple and understandable. In Debit & Credit, there is a possibility to keep a record of the money spent as well as the planned purchases. The application takes into account all future expenses and warns you about that by the amount of the balance that opens when you swipe down. The program shows cost statistics for free.

Alzex Finance.

The app allows you to create an account for each user. Thanks to that, each member of the family can choose what movement of funds will be available to everyone and what should be hidden. The tree tag system allows you to take into account costs for major and small categories. In the app, you can monitor your debts and set financial goals.

Monefy.

Monefy will help you organize a convenient system of accounting for all your costs. This application has an intuitive interface that allows you to instantly add new entries. If you have multiple devices or you want to monitor the expenses of the whole family, then the application has a synchronization system via Dropbox. Backup data are stored in the same cloud service in case of any failure or loss of the smartphone.

Money Manager.

This is one of the most functional applications. Using it, you can monitor revenues, expenses as well as get full statistics for any period you are interested in. You will be able to enjoy the following advantages: a desktop access, a double entry system, budget planning for certain categories, management of credit and debit cards.

Family budget example.

How to create a family budget? The family budget planning scheme depends heavily on the type of family budget, which is used in your relationship. Therefore, if you reflect on how to create a family budget, first of all, you should decide on the type of family budget that you will use (joint, mixed or separate). Here is an example of the typical family budget, which can be used as a basis for your own one.

Earnings Plan Fact Deviation

Earnings

Plan

Fact

Deviation

First spouse

Salary

5000

5000

0

Odd jobs

1000

1500

+500

Second spouse

Social benefit

800

800

0

Side job

1000

1700

+700

Family income

Interest on bank deposits

3000

3000

0

Total income

10 800

12 000

+1200

 

Compulsory costs

Loan repayment

1300

1500

+200

Saving

500

800

+300

Total compulsory costs

1800

2300

+500

 

Family costs

Fixed costs

Utility costs

500

450

-50

Cable TV

50

50

0

Internet

50

50

0

Variable costs

Food

2000

2100

+100

Clothes

300

500

+200

Household cleaning products

100

100

0

Entertainment

300

0

-300

Total family costs

3300

3250

-50

 

Personal costs of the first spouse

Books

200

200

0

Something

300

350

+50

Total costs of the first spouse

500

550

+50

Personal costs of the first spouse

Cosmetics

100

50

-50

Something

200

200

0

Total costs of the second spouse

300

250

-50

Unforeseen expenses

3000

1500

-500

Total costs

8900

7850

-1050

Saving of the family budget

0

1050

+1050

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