Household budget – How to run it, when and is it worth it, and what does planning expenses and income get us?
Household budget – this statement falls every payday or at the end of the month, if we have inaccurately estimated and distributed our finances. Its creation and maintenance will certainly help us avoid uncomfortable situations and spend our money efficiently. The creation of such a budget itself is also not difficult or does not require high mathematical skills. Below we present a household budget “from all sides” and suggest how to create it, run it and why it is so important to manage household money properly. However, if you don’t feel like analyzing your household budget then you should consider visiting a financial advisor.
A household budget – or what?
A household budget is a determination of income and expenses in a given month, and planning how we will manage this money. We can run a household budget regardless of what income we have, how many people are in our family and how we earn money. The task of a household budget is to clearly define expenses and income and record them in a physical way. We can conduct the household budget itself either electronically, for example, on a computer, or in traditional form – on paper. We also do not need to make complicated calculations and only enter income and expenses there and plan them accordingly. On the Internet there are many ready-made templates or templates for a household budget, so that we will only be able to enter specific amounts, and in return we will get a whole statement.
Why is it worth keeping such a budget?
Keeping a household budget makes it easier to manage our finances and is beneficial in many ways. The first advantage of keeping such a budget is to secure funds for the most important expenses for the next or current month and to spend money safely. This way, we won’t find ourselves in the uncomfortable situation of spending too much money and running out of money for our most important expenses or bills. If we keep a household budget, we will also spend money efficiently, as we will know how much money we can spend on a specific purpose. This way we will buy or pay for all the things we need, from the lowest to the least important. If we know how much money we have left and how much we can spend on smaller pleasures or gadgets, we will be able to treat ourselves to them. Clearly defining the upcoming income and expenses “on paper” also gives a lot of mental comfort, so that without worrying about the state of our finances we can focus, for example, on work or leisure – which is not possible if we have a mess in our home finances. Running a household budget itself is not difficult or complicated. To run it, it is enough to devote a little time. Writing down all expenses can be done on a single sheet of paper from a notebook and significantly increase comfort and financial security.
Set a date for your household budget
The first step in creating our household budget is to set a date – the time frame in which we will create our budget. This can be the period, for example, from March 1 to March 31 or from March 10 to April 10. It is important that it be a full month, as this is the form in which we receive salaries in Poland. The beginning of our household budget certain to be, take place when we receive our salary, so that we can also spend money from the first day. If we receive several salaries in the family, or we want to create a certain safety buffer, it is worth, for example, for the previous month – February to collect all income and allocate it to spending in March. This way, already at the beginning of the new month – March 1 – we will know what funds we have at our disposal and we will have all the cash for March ” in hand”. In this way, we also create a “financial cushion”, which will be useful, for example, in an unforeseen situation.
Income and expenses
Once we have a specific period of our household budget we will be able to start creating it. The sheet or statement should be divided into 2 parts. In one we will put income and in the other we will put expenses. In the income part we will put all the sums and amounts we will earn for a given accounting period, for example, for March, and we will be able to use them. This will include, for example, salary, spouse’s salary, pension, allowances, bonuses, etc. If we determine all income and know what money we can spend in a given month, we can move on to creating the expenses section. In it you should write down all the expenses you will make from the most important to the least important and surplus.
The most important expenses will certainly be rent, buying medicine and foodstuffs. Next is how much we will spend on fees, subscriptions, etc. On the next places we can put the amounts we will spend on fuel for the car, monthly tickets, “pocket money”. Lastly, we should also put on the list a certain amount for unforeseen expenses, trips, gadgets or things that we want to do, but are not the first necessity such as replacing tiles in the bathroom, or buying chairs for the garden. After writing down all expenses, we should summarize expenses and income. If the income is higher and we still have a certain amount left to distribute, it is worth allocating it to a financial reserve or investment. We can put such an amount, for example, into a deposit or bank account. It will certainly come in handy if summer comes and we want to go on vacation, or if we want to replace, for example, a TV set with a new one.
When in our budget – expenses will be more than income, we should reduce the sums for specific expenses. First we should reduce the sums for the least important things, that is, those at the bottom of the list. This will give us a balance between income and expenses and provide funds for the most important expenses.
Adhere to the budget!
If we have already created a household budget, we should definitely follow it. This will help us maintain financial discipline, prevent us from falling into financial problems, and know exactly how we have our expenses planned, and that we have enough money for them. If we are regularly short of money in a particular category, for example, for food or free “pocket money”, we can include slightly larger sums in the next budget. It is definitely not worth “picking” without control money from the general pool, as this way we will not be able to control spending. A well-functioning household budget is a very important element that is worth taking care of.
