The rapidly increasing inflation these days has made it difficult for a common man to manage his household budget. The managing household budget doesn’t only stand for meeting end needs, but it also includes the saving of a certain amount of money to secure it for future use or for in an emergency situation.
We believe you don’t need to be expert in calculations to manage your household budget ideally, but you need to be smart on your spending habits and keeping a record of them.
Today, we’re going to discuss a few tips which will help you manage your household budget.
NOTE DOWN YOUR TOTAL BUDGET
In budgeting, the first step for you would be to write your total income on top of the spreadsheet. This amount is the sum of you and/or your partner’s monthly income. The very first step is to write down your total income at the top of your household budget spreadsheet.
If your income isn’t fixed or permanent, we recommend you to write the average of your monthly incomes. However, if you have any additional source of income, do not put this amount into the sum of total income. Set it apart for few tough days or invest it somewhere.
SUM UP YOUR FIXED EXPENSES
In this step, you’re going to minus the fixed expenses from your total income. Fixed expenses include but not limited to mortgage, utility bills, grocery, debt, transportation fee, school fee, taxes, etc.
FIGURE OUT YOUR NET INCOME
Now after subtracting your fix expenses from your total income, there are two possible ways. Wither your amount will be negative, or positive. In case of positive amount, you need to note it in a separate column regardless of how little the remaining amount is.
However, in the opposite case, where your amount is in negative, it means your spending is more than the amount you earn. You need to revisit your expanding habits by differentiating ‘needs’ and ‘wants’.
SAVINGS / EMERGENCY FUNDS
If you could be able to save some amount after subtracting your monthly expenses, you’re in a safe zone. Try to save 10 to 20 percent of your income for the emergency fund. Finance experts believe that the ideal saving for an emergency fund should be equal to the total income of almost three months.
This money can be utilized in case of an emergency or in helping you to meet any sudden expense.
GET THE FAMILY INVOLVED
Getting the entire family involved in managing a household budget is one of the most important things to do. You can’t achieve the goal without getting all residents on board. Instead of acting like a dictator by enforcing limitations on every members’ spending habits, it’s a good idea to involve everyone in the process and ask for their suggestions and recommendations about cutting down expenses.
REGULATE SPENDING STYLE
Happy and Sorrowful occasions are the essential phases of life. Therefore, you need to put aside some amount of money to deal with such situations as well. Whether you’re purchasing anything for your need or looking to gift someone, If your budget isn’t significant, go for economical and practical options.
You need to adjust your spending style in order to save some amount every month. Never make the habit of eating outside the home. Control your ‘wants’ and try to cut expenses through solving simple plumbing and electric problems of the house yourself, instead of calling plumber and electrician for easy tasks.
HAVE SOME CONTROL WHILE GROCERY SHOPPING
While on monthly grocery shopping, don’t let every attractive product deviate your focus. Having a list of your necessities for the month is highly recommended. It helps you to stay focus on your needs rather than deviating towards ‘wants’. Set the maximum amount you’re willing to spend on monthly grocery and try not to exceed this limit.
CHECK EXTRA WAYS TO EARN MORE CASH
You should look for ways to earn extra income in your leisure time, even if your salary is enough to fulfill your monthly expenses. Earning some extra cash help you to save some amount monthly. There is a number of ways for you and/or any of your family members to earn along with your regular job. You can do part-time freelancing, giving tuitions, or can have any small home-based business.
REVISIT YOUR HOME BUDGET
Managing a household budget is not something you can do once for the rest of the year. You need to have a constant check on your budget sheet on a monthly basis.
Since, we all know that despite our fixed expenses, our monthly expenses do fluctuate month to month. Therefore, you need to revisit your budget sheet on various occasions.
To avoid extra expenses, it’s highly recommended to pay all the bills on time, so that you can avoid paying penalties. Avoid wastage of electricity.
Following these steps may sound a bit hectic to you at the moment, but carrying out these steps will surely pay you off in the future.