One of the keys to keeping our finances healthy is to have a family budget
Do you think you know how to manage your household finances? In order to see if we are managing our household economy correctly, we have to determine where we are: how much we earn, how much we spend, how much we save and if we have debts or loans to pay. We have to manage our income and expenses correctly so that we are not drowning in debt.
One of the keys to taking care of the health of our finances is to have a family budget. Thanks to it we will be able to be aware of how much we earn, how much we spend, where our expenses go and how much we end up saving.
The first step to make a family budget is to order our income and expenses on a time scale: this allows us to be aware of the monthly income and expenses in order to plan each month and see what % of our monthly salary can be allocated to debt repayment, expenses or savings and also of the income and above all, annual expenses (IBI, road tax…) to also take them into account.
Then, we have to organize all the information related to expenses and make sure that we do not miss any: for this it is good to have a notebook or an app in which we write down each of our expenses. If you do not do it, we recommend you to start doing it from now on.
To make our budget, we must also classify these expenses:
- Fixed mandatory expenses
- Variable mandatory expenses
- Exceptional or one-time expenses
- Non-compulsory expenses
Next, classify the income:
- Non-recurring non-financial income
- Non-recurring non-financial income
- Financial income
Once we have made the classification, we recommend you to reflect it in an excel sheet. ASUFIN has prepared a template that you can download for free here.
Here are some tips to help you adjust your budget:
- We will always start with the category of non-obligatory expenses.
- Then, we will analyze if we can reduce those variable mandatory expenses, mainly food or clothing.
- Then we will move on to analyze if we have the possibility of improving some of the fixed mandatory expenses. For example, the mortgage payment.
- We also recommend you to avoid using financing to reduce expenses and to avoid debt reunifications, because in the long run the interests to be paid are higher.
- Evaluate possible future expenses, especially those of significant amount, as they may condition the ability to pay basic expenses.
Did you find this content useful? Let us know in comments if you have applied it in your daily life and if you have noticed that your family economy is healthier.
