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Jan 4, 2022
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How to rationally distribute the family budget

How to rationally distribute the family budget

It is useful to learn more about the family budget, because this is a full-fledged accounting department in which all sources of funds must be taken into account.

The family budget is the basis for the financial stability of any family, full-fledged accounting, taking into account the interests of all parties.

Young families often ask themselves the question: how to make up, correctly distribute and where to save money, so that they have enough for all basic needs, and also have the opportunity to regularly go on vacation, make large purchases and indulge in pleasant little things, because it is one thing when you live on your own, but another – when it is necessary to take into account the interests and needs of all parties.

In the current realities, a clear management of the family budget allows, if not postpone, then at least live a normal life from paycheck to paycheck.

Also, the planning of the family budget is a lifeline for those who do not earn very much or expenses exceed their income.

Why budget planning is necessary

For many families, it can be difficult to set aside the required amount of money for some expensive purchases. Moreover, often people are faced with a lack of funds even for basic needs.

The reason for this is simple – a lack of financial literacy and problems with budget allocation.

To solve your money problems, all you have to do is start recording how you plan to spend it. By identifying the amounts that you need for certain purposes, you can quickly understand how you can save them and how much you need to save.

Moreover, it is the rational allocation of funds that will help avoid emotional expenses and purchases of unnecessary things.

Family situations are different for everyone, they can change often, so there are no unique tips on how to plan a family budget. But there are basic principles and approaches that you can take as a guide to action and adjust to your family.

The main principles of working with a family budget

Experts recommend adhering to the following algorithm for distributing finances:

  • Start recording income and expenses on a regular basis. This way you will be able to understand what you are spending your money on and what expenses could have been avoided.
  • Clearly indicate the amount that you are ready to allocate for any areas of life. Separately list expenses for housing, training, grocery shopping, entertainment, and other aspects that are important to you.

Try not to exceed the established limit of the amount and do not spend more than planned.

  • Define your financial goals and create a strategy for achieving them. For example, if you want to buy an apartment, understand how long it will take you to accumulate the required amount.

Set aside the required contribution on a monthly basis and do not waste it.

  • Form a “airbag”. This is the amount that can cover your expenses for at least one month. It is better if the so-called “pillow” is enough for at least three months.

This money will help you if you suddenly become unemployed or face other problems.

Professionals also recommend that you start saving money in a savings account (at least 20%) and start investing over time.

Remember that investing helps to increase your monthly income in a relatively safe way. With proper investment, your actions are minimal – it is enough to decide where you want to invest your money.

There are 3 universal approaches to budgeting for a month

  1. The 80 to 20 principle, when 80% of the total income is left for compulsory spending, and 20 for payment of debts and / or savings.
  2. Principle 50 – 30 – 20, when a smaller amount goes to the reserve and payment of debts (if any), the average amount implies optional expenses (leisure and entertainment), and the principal amount is all basic and obligatory expenses for food, travel, paying bills …
  3. The principle of 4 envelopes, when you save 20% of the total income right away, pay utility bills / rent from the remaining money, and divide the total amount equally into 4 parts – one for each week.
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