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What it is?
Why do you need a family budget?
A family budget is a family’s financial plan for a certain period of time, for example, a month, a quarter, a year. It takes into account in detail income, expenses, savings. They count everything that each family member brings into the house. The spending column includes funds for general food, utilities, transport, communications for everyone, and entertainment. This also includes everyone’s personal expenses. A must-have item is emergency savings.
Classification
Popular types of family budget
General
Everything earned is put into a common piggy bank, each family member takes money from there when needed. Spending is planned and coordinated with each other. This method of forming a family budget is convenient if you have the same views on finances and you completely trust your other half.
- Spouses participate together in the formation of the budget and manage it equally.
- One earns and both spend, but they make spending decisions together.
- All money is visible, income and expenses are transparent, everyone knows who brought in how much and what they spent on.
Separated
This planning method assumes that each earning family member pays his share of common expenses. For example, one is responsible for utility bills, the other is responsible for clubs and sections for children. The spouses also share other needs, and everyone spends the remaining funds as they wish.
- Everyone can safely spend money on themselves, achieve self-realization, and receive additional education.
- The spouses feel calm and gain a sense of satisfaction from the fact that they can decide for themselves how much and what to spend.
- If you want to save for a common financial goal, this is discussed separately.
Mixed share
A mixed budget is understood as a combination of general and separate forms of budgeting. The point here is that each of the spouses has money for themselves personally, but both also put it into a common “treasury”. It pays for utilities, vacation trips, repairs and other family needs.
- There is both a general budget and your own money. Both feel financially equal, and both take care of the family.
- The psychological atmosphere in the house is also calm and comfortable for both. No one reproaches each other or tries to hide anything.
- Both husband and wife can safely spend their money on themselves without depriving the family.
Stages
Budgeting Process
Preparation
Write down your income and expenses on a simple piece of paper or in an Excel spreadsheet, or use any of the existing programs for this.
Analysis
Collect data for two or three months and then see what you come up with. What are the mandatory expenses, and what may not exist at all or at least for some time.
Designation of goals
So, you have analyzed your income and expenses, found reserves - then you can make plans for the short and long term. For example, buying furniture, traveling.
Choosing a strategy
Here you need to develop a strategy and tactics that will lead you to your goals. You should describe all your actions in as much detail as possible. And set realistic, achievable goals.
Planning a monthly budget
This, again, is convenient to do in a table, only it will turn out to be more complex. For your travel goal, write down your contributions in the plan column, then enter how much you actually contributed, and see how much you deviate from the plan.
Analysis of results
Summarize the results at the end of the month. Compare the planned and actual figures, see where you spent too much and where you saved. If you managed to save money, think about where to spend your “free” money.
Divide the family budget into three components. Plan that 50% of cash receipts will go to basic needs: food, housing and amenities, travel. Another 20% should go to pay off loans, if any, and for an airbag. The remaining 30% can be spent on optional expenses: cinema, cafes, entertainment trips.
Financial airbag
In case of force majeure, set aside an amount that will allow the family to maintain their usual standard of living for up to six months. No one expects illness or job loss, but if this happens, you will have the time and resources to solve the problems.
Avoid impulse purchases
Don't waste your money. If the family budget receives more funds than expected, it is better to set them aside immediately rather than spend them on spontaneous purchases. This way you will get what you save for faster.
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