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Manage your household budget

Author: Shantanu Dutta   |   Date: 21 Apr 2017   |   Comment: 0 Share:   |     |     |  

Troubles in managing the budget, or simply, money is a common challenge in most of the middle-income group families today. It’s truly a key task to handle the household expenses in balanced and precise manner. If the budget is not maintained well,  it can become the main reason of a financial crisis.

When it comes to creating a household budget, it takes adequate time and right decisions in order to control the money and save it for other essential needs so as you may not be compelled to cut your essential expenses at the month end.

All you need to set is your priority expenses and reduce the unnecessary expenses and this can be noted down either using a notebook or in a digital form as per your comfort. The manual calculation may have errors and requir additional efforts. Hence, for flexibility, you can take recourse of budgeting software, financial websites or applications.

 Now, here is step by step guide to creating your household budget so that you do not suffer negative impacts of not having one at the month end:

Record All Sources Of Income

It will take a chunk of your time to calculate your total earnings for instance, what you and your spouse earn. Be sure that you are jotting all your income sources including paychecks and every other source of incoming money, like bank deposit interest, rentals, etc.

This initial step can help you out to manage your finances in an effective way so as your incoming amount must not be less than your outgoing amount.

Track All Your Expenses

It would be a good idea if you track your expenses category wise. So, divide your expenses into some categories:

Non-Adjustable Expenses

You cannot ignore your fixed expenses such as your monthly bills including your mortgage, rent, electricity, water, gas, telephone or mobile, DTH, and Internet bills etc. It also includes your kids’ education expenses such as monthly fee, activity or event fee, bus fee or lifestyle expenses because kids grow rapidly.

Adjustable Expenses

Adjustable expenses are those expenses that you cannot remove from your routine life but you can adjust in case you run out from money at the end of the month. Some of them are groceries, daily care, fun & entertainment.

Debt Payments

Your debts are your responsibility and you cannot move your eyes from your debts. Usually, you are needed to pay minimum instalment(s). Such debts can be loans or interests, EMI or credit card payments, insurance premium etc.

How To Cut Down Your Unnecessary Expenses?

In order to cut down your unnecessary expenses, you need to decide a fixed amount that how much to spend on dining out, shopping, and entertainment. Here are few tips that can be implemented to maintain your household budget:

  • Take a firm determination that you may not spend more than the decided amount of your fun and entertainment.
  • Rather than buying prepared and instant grocery items you can simply buy raw groceries and can cook at your home.
  • Be sure that you do not spend in costly cosmetics and unnecessary personal care products that can spoil your budget.

Through these savings, you can build your emergency fund and can fulfil your emergency requirements such as medical expenses, traveling expenses or shopping for loved ones marriage gifts, etc.

Thus, once you write down your income source aside and your expenses and debts on the other side, you may get an idea to create the right household budget. So, iIt is all incumbent on you what your priority expenses are or where to spend or where to cut from in order to sustain your perfect household budget.


 

Other articles by Shantanu Dutta

Preparing for Retirement

Setting Smart Financial Goals

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