In these times of change and high cost of living, family resources can be difficult to manage. How do you master the challenge?
The answer is not necessarily a higher income. Economists say the answer is to have a sense of where the money is coming from and where it is going, and to be willing to make informed decisions,hence a budget is needed for that fact.
Budgets "still create all kinds of images of monotony," lots of people just fail. Some also associate the need for a budget with low income or a lack of education. But people with high incomes also have financial problems.Budgeting is relatively easy to learn. A list of income and expenses is created and the expenses are then booked in income. In fact, budgeting can be fun and living with it can be fun.
Getting Started
Let's start by making listing the sources of income. For most of us, this should be easy as it usually only comes down to a few things - salary, savings interest, etc.
But don't rely on unreliable sources such as overtime pay, bonuses, or freebies. Financial advisors warn that planning unreliable sources of income can lead to debt. If such income is received, you may use the money to feed yourself and your family, help those in need, or support a good cause.
However, it can be a bit difficult to make a list of costs.Its hard for many people to figure out where their hard-earned money is going.While one way have found to solve this is: “For a month use a slip of paper and write down every penny you spent. And at the end of each day write the amounts in the household book. "
By consciously recording what you are spending, you can find all of the "mysterious money" that you seem to be losing. However, once you know your spending habits, you can choose to stop tracking what you spend each day and move on to your monthly expense list.
Listing monthly expenses
You can draw a diagram similar to the one below.
In the Actual Cost column, enter the amount you are currently spending on each item. Limit the number of main categories with titles like "food", "home" and "clothing". Do not skip the respective sub-categories.If you want to accommodate other people, this can also be a sub-category "Food". The idea is to let the pictures reflect your individuality and preferences.
When designing your spreadsheet, consider quarterly, semi-annual, annual, and other fixed expenses such as insurance benefits and taxes. But to include them on the monthly chart, you need to divide the value by the corresponding number of months.
An important part of the cost list is "saving". While many don't view savings as an expense, you may want to set aside a portion of your monthly income for emergencies or special purposes.If you can't save at least 5% on your after-tax income(and that’s a bare minimum),cut down on credit, change your lifestyle, and get back to basics. Yes, be sure to include your savings in your monthly budget.
As a cushion for possible unemployment, it is now generally recommended to have a savings of atleast 6 months of your income.If you get a rise save half of it.
However, the budget balancing is more than just income and expenses. The goal is for costs not to exceed revenue, so you may need to cut costs.
Important?
How important is it? It is important to pay attention to this column, especially if you find that the Total Budget column exceeds your income, but it is difficult to decide if an item is important and how much money is spent on it. It is a time of change, when we are constantly bombarded with a wide range of new products, it helps to consider all costs in terms of a specific need, a questionable need, or a pleasant luxury.
When things change, you may need to re-evaluate the content
Debt reduction
Uncontrolled debt can ruin your efforts to make a living. The long-term debt used in purchasing an asset like a valued home can be beneficial, but the credit card debt used in your daily life can be devastating. "So don't pay a dime for the card fees," says one Newsletter.
Financial experts recommend paying off your credit card debt even if you are looking to increase your savings. There is no point in holding debt at high interest rates while encouraging saving at low interest rates.
In some countries, even a mortgage is no longer as good as an investment as it used to be. And home buying can be costly in terms of interest rates. What can be done to reduce housing costs? Invest more money or buy a house cheaper than the bank is asking,If you already have a home, resist the temptation to expand it if that’s not necessary.
Paying a large premium can significantly reduce the cost of a car loan. However, you should put it in the family budget and save upfront. How about a good vehicle from the previous owner? A lower deposit can mean a lower financial burden.
It’s possible
Whether the budget works or not depends on its realism. Couples who have managed to live within their budget say, "If the amount on the house is too small to be used for a month, the system will not work.”
