How to make a family budget?

Reading time: 3 minutes

Family budget sounds like accounting, business and complexity. But, it is a matter of order, consistency and common sense that will not take you more than half an hour a month if you follow these simple steps.

1. Income statement and balance sheet: your financial record

The first step is to think of your finances as if they were the income statement of a company: that is, what you enter and what you spend in a specific period of time. This is something common to what we are used to. But it is less frequent to face your finances by looking at the balance of your economy: that is, by looking at what do you have (assets) and what do you owe (passive).

2. Classify

Stop thinking of your income and expenses as a totum revolutum and classify them. The income can be fixed (you will receive insurance, except catastrophe) or variable (they could fail): differentiate them.

To think about your expenses, rank them according to their “inevitability”. That is to say:

  • Debts is all there is to pay yes or yes
  • Unavoidable expenses are those that help you develop your life normally (water, electricity, fiber, mobile, unforeseen, transport …)
  • The rest are those expenses in which we have more room for maneuver (leisure, clothing, travel …)

3. Detail, measure, analyze

Make a monthly table in which you group your income and expenses into those big categories. Neither too detailed nor too general. Adapt it to you, the degree of control you want to have and the job you are willing to take on.

Here, the example for an urban family with two children in which two salaries enter:

INCOME STATEMENT

EXPENSES INCOME
SHOPPING BASKET SALARY 1
TRANSPORTATION AND GASOLINE SALARY 2
SCHOOL EXPENSES SECOND RESIDENCE RENTAL
EXTRACURRICULAR ACTIVITIES EXTRA INCOME
HOUSE RECEIPTS (electricity, water, fiber …) (…)
SECOND RESIDENCE RECEIPTS
CLOTHING AND LEISURE
MORTGAGE
SAVING
(…)

Often, we forget another important part of our budget: the family balance, that is, what you have (assets) and what you owe (liabilities) at any given time.

It is simple, it is enough that once or twice a year, you make another table to control your patrimonial reality. In other words, your wealth (cash, deposits, vehicles …) once your debts have been discounted (mortgage, loans, outstanding card payments …).

This example will help you:

BALANCE

ACTIVE PASSIVE
Current account 5,250 Mortgage 185,000
1st Housing 250,000 Car loan 14,600
Village housing 35,000 Pending cards 6,300
Deposit 8,000
Stocks and funds 25,000
TOTAL ASSETS 323,250 TOTAL LIABILITIES 205,900
NET EQUITY
(PN = ACT-PAS)
P + 117,350

4. Limits

You already have all your expenses in front of you and you have to make an approximation of your monthly budget. You also know better than anyone if you are drowning or manage to save. Put spending limits on those expendable items or that take you straight to the red numbers. It doesn’t matter whether it’s records, clothes, or paying for the rounds: set a reasonable maximum.

5. Complies

The best advice for you to make your budget is that you do it with the intention of complying with it. Only then can you earn money, save and invest to live better.

You’re just one budget away from controlling your finances… so your finances don’t control you.

Here we leave you orna template To help you control your family finances, you can include your income and expenses and be able to analyze your income statement.

Economy, family economy, Expenses, income, Investment

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