If you really want to solve your financial problems, you have to learn how to take control of it. The best tool that you can use for that is a budget plan. It allows you to get a general overview of your income so you can make sure that you are only spending within your means.
Of course, deciding to budget is easy. The challenge is in the implementation - especially when it involves the rest of the household. But before you can implement, let us discuss how you can prep your budget so the family can adapt to it easily.
The creation of your budget involves a simple detailing of your income and expenses. While that is simple, it can be very tedious. But it has to be done so that you and your family can take control where your money goes to.
Here are some of the household costs that you will analyze in your budget.
The bulk of your budget will go to your home expenses. Usually, 40% of your expenses are spent for your home. Most of it goes to either rent or mortgage. Make sure that you list down the things that you need at home and you will not leave out the annual or quarterly expenses. Some people fail to place these costs on their monthly budget and usually, when the time comes for these financial obligations, their budget goes down the drain. So consider carefully and make sure your list is complete. The home expenses also includes your home taxes, insurance, maintenance and utility bills.
The second expense on your list is your transportation costs. This is the second expensive spend that you will have on your budget - at least when you own your car. From the car loan, insurance, fuel expenses and saving up for the maintenance - all of these will take up approximately 20% of your budget. If you want to trim this down, you can opt to use the mass transport system or carpool with colleagues. And if you have to run errands, make sure they are done in bulk so that you save on gas.
Another expense is for the food. This takes up around 15% of your total monthly budget. Although it is unwise to sacrifice the quality of your food, there are ways to save like buying in bulk or cooking at home instead of eating out. Marketing tips like buying fruits that are in season will allow you to eat them without spending too much.
Savings, health care and insurance expenses should also be a part of the list. Unfortunately, most households do not consider these as priorities. When there is are debt payments, this is the first to be cut off. These are all important and when prioritized, can keep the household from incurring debt when an emergency strikes.
Lastly, the personal expense is also a part of your budget. This is where you will get a lot of savings. If you really want to cut back on your expenses, this is where you will get most of them. This is where your entertainment expenses fall into. You need to regulate and make smarter choices on how much of your money goes to personal wants and needs.
When you are creating your budget, it helps to involve the rest of the family. This way, you can all decide on what sacrifices everyone can pitch into so you can start living within your means and in the long run, grow your household wealth.