A household budget is a key piece of a solid financial foundation.
It will help you manage your money, control your spending, and save more money.
If you’re planning to create a budget plan for your household, here are some tips to help you.
List down your sources of income
Your job is one source of income, but if you have other sources, list them down.
List reliable income sources — the ones that you get on a regular basis.
Your budget must be set on a reliable source of income.
In the case that you’re self-employed and you have a fluctuating income, you can use a monthly estimate.
List & add up your expenses
Most of your household bills are fixed as well as your mortgage or rent.
It’s best to list down all your fixed expenses.
While variable ones such as electricity and water bills, list down the maximum amount you plan to spend for those.
Finance expert Jess Peletier from perthbroker.com.au recommends that mothers take out your bank and credit card statements to help you get an idea of your monthly expenses.
There will be expenses that don’t occur every month but you account them for periodic expenses in your monthly budget to help ensure that you can pay for them when they’re due.
Add up all your expenses so you can come up with how much you need to set aside every month.
Adjust your expenses
It’s possible that when you add up your expenses, you’ll come to the realization that you’re living beyond your means.
This is when you adjust your expenses.
The first place that you can adjust is your variable expenses such as your takeaways, hobbies, etc.
You can also adjust your fixed expenses by reducing your phone bill, canceling your gym membership, or not going on a vacation this year.
When you adjust your expenses, you need to evaluate your wants vs. needs.
Follow & track your budget
It’s easy to track how much you spend every day — list it down on a sheet of paper, create a spreadsheet, or download an app.
Take note of this and research ways to do better next month.
Every end of the month, add up the money that you spent and compare it with your budget plan.
Use this information to create your next month’s budget plan.
Remember, there’s no one-size-fits-all solution.
You really have to try a couple of household budget plans to get it right.
You might find it difficult to set and stick to a household budget.
However, if you want to be financially stable and debt-free, this is the way to go.
Even if you find yourself in a tight financial situation right now, don’t worry.
When you pay off your debts and cut your expenses, you’ll begin to feel relief.
For now, set a strict household budget and watch it transform your life for the better.
It will not only affect your financial state but your whole life as well.