Home financial management
Home finance has to be managed in the same way as the head of the company manages its capital.
Start building your home budget by writing down the expenses of the previous month. You need to check step by step what you spent your money on. Write it down on a sheet of paper:
- how much you were charged with fixed fees, i.e. bills, repayment of installments;
- how much unplanned expenses (e.g. birthdays, costs of repairing a broken car, etc.);
- how much expenditure is necessary (e.g. food, fuel, cleaning products).
Note: Writing down your expenses alone will give you an idea of how you managed your income and what consumed the most money. This way you will know what you can change.
Home budget step by step
It starts with writing down all your income and preparing a list of expenses that are waiting for you in the coming month.
The first item on the list of expenses should be fixed costs (rent, telephone, TV and Internet bills, electricity, gas, heating and tickets or fuel, as well as loan repayment instalments). You have to count how much money in total. The rest of the expenditure is adjusted to them.
If it turns out that you spend too much money, you have to think about what you spend most on.
If you pay too high phone bills, you have to reduce the number of conversations, and if your home budget is reducing your energy bills, start saving energy.
Note: Fixed charges that are not paid on time = interest. That’s why they have such an important place in the planning of home finances.
Regular expenses should not exceed 20-30% of monthly income.
The next heading should be the expenditure on food, cleaning products, cosmetics, medicines and possibly clothing and footwear.
Of course, you can’t stop buying them, but you can save on them.
That’s why it’s worth looking for the cheapest shop in the area, and always go shopping with a list where you should find the products you need most.
Note: Compare prices and choose larger packages, because in the final calculation it will be cheaper anyway. Plan your purchases of shoes and clothes during the seasonal sale period.
Try not to spend more than 60-70% of your monthly income on current consumption.
And at the end of the section with unplanned (occasional) expenses, e.g. gifts for the birthday of someone from a family or payment for a professional, but also expenses for culture (books, cinema, theatre).
Allocate 10% of the funds you have at your disposal.
Note: After that, write down all your expenses within a month.
You divide your monthly income into four parts:
- bills and repayment of debts;
- food and cleaning products;
- unplanned expenses;
Enter each expense in the appropriate box.
Note: You cannot juggle with money and reach for funds you have allocated to e.g. bills and buy food for them. You must keep to pre-established rules, because this is very important if you want to have control over your own finances.
At the end of the month, you count exactly all your expenses. Understand what you spend the most money on, you will know what you need to limit and what you can afford. After a few months of systematic quoting and dividing money, you will notice a certain regularity, i.e. you will get to know what you spend the most money on every month. You will also find out which expenses you can eliminate at all.
If you start planning your finances, you will quickly find out that it is profitable and then you will have to think about what to do with savings, because keeping them in the sock is certainly not a good idea.
It is a good idea to put them on a savings account or bank deposit. They have an interest rate there, so they will work for you and make a profit.
You will also be able to control your home finances more easily, as the bank sends regular statements indicating the operations performed in a given month. So you have full control over how much you spend and what you spend your money on.