- Keep track of your expenses using an organiser, paper or electronic – either can help you to stay organised.
- Analyse your spending habits: could you cut down your expenses by taking lunch to work instead of buying it each day?
- Set yourself goals: anything from saving for a new winter coat to saving for a house.
Budget management is very important, but taking care of your family finances can seem difficult if you don’t have much experience in budget planning. This article will provide tips and techniques you can use to make sure that you are on top of your personal budget. This way, you will be able to enjoy your life and live within your means.
Keeping personal budgets includes knowing exactly how much money you make, recording how you spend it, and knowing what you have left over at the end of the month. All good budget management begins by keeping careful records. Create a spreadsheet, use a notebook, or download a digital personal budget organiser on your computer or smartphone to record all of your bills and expenditures each month.
Your records should include the following categories:
- Household expenses: these include rent, mortgage, water, heat and electricity bills, housing taxes, and repair work. Except for repair work, these are usually called fixed expenses, as they do not vary from month to month.
- Living expenses: these include food, transportation, personal care products, and clothing purchases.
- Social expenses: these include restaurant bills, cinema tickets, holidays, and all other social activities. Living and social expenses are variable expenses that can be altered to fit your lifestyle.
- Savings: You should also record any money that you are putting into a separate savings account for emergencies or future expenditures.
A separate column of your money planner should reflect all money you have made that month through salary, loans, and borrowing.
- Remember to include your net income after taxes, as opposed to your gross income before taxes and reductions, as this may skew your calculations.
- Tally all of your expenses in a column next to your earnings; this way you can see if you are spending more money than you make.
How to Budget Money by Changing Your Spending Habits
Now that you have all your financial information in one place, it is easy to look at your personal budget and make any necessary changes to your routine. It is time to take a hard look at what patterns may emerge. What percentage of your salary, for instance, are you spending on household expenses as opposed to social expenses? Are you spending too much on shopping trips or meals? Do you have any money left over at the end of the month, or are you spending more than you earn and relying on credit? If so, it may be time to make some changes.
You can start by saving money on everyday activites, like reducing what you spend on doing laundry. If you save a little money every time, it can really add up!
Goals and Incentives
One way of incentivising yourself to change your routine in small ways is by adding up the cost of small daily expenses over a month or a year. A coffee, ice cream, or magazine may not cost very much, but this expense will add up over the month or year. Perhaps you could use that money to afford a nicer apartment, a longer holiday, or a new item of clothing?
Setting goals for yourself is another way to make it easier to save money. Long-term goals – like buying a house, upgrading your car, or saving for retirement – should complement short-term goals like reducing your restaurant bill to a certain amount each month.
These steps will help you balance your family finances. By compiling all your household’s financial information in one place, you can maintain complete control over your finances and take the stress out of organising a budget!
Plus, if you or your kids have recently flown the nest, discover tips on budgeting for students here!