What is budget and why putting together a budget is important:
The budget details all household income and expenses. It is a very effective way of knowing how the money was spent, how much is needed for the satisfaction of basic needs and how income should be distributed to make it possible to fulfill all the obligations and achieve the important goals. Following are the steps of how to budget a household:
Your budget, plus help you identify your expenses and control your finances:
• It will help avoid impulse spending
• The guide to decide what can and cannot buy
• Allow you to keep track of how you spend your money
• Household budget will help create a savings plan
• Contribute to protect against the financial consequences of unforeseen events
Download free calculator:Household monthly budget calculator
The first Budget:
It is very likely for the first time you assemble a budget will be surprised with the amount of expenses facing your home every month. This realization is best to do as a family, thus each person can see what approach can work with maintaining the balance of the household bills.
Classify your expenses and identify those that are easily reducible to see what you can save.
We suggest you classify structural or compulsory costs (rent, electricity, water, etc.), costs of basic necessities (food, basic clothing, transportation, etc.) and discretionary costs (entertainment, tourism, no basic clothing, etc.)
Structural costs are directly related to lifestyle, are difficult to change at short notice.
As for the necessities, you can decide when and where the purchase is made. It is recommended that, besides taking note of them, choose a single payment and that is easily maintained. This will buy more easily and increase control over these expenses. Pay with one credit card and making a payment on the payment date can be used to meet the expenses list and have a better control. Easily you can identify “where the money is going”.
Regarding discretionary spending is also advisable to select a single payment as a way to maximize control. Payment by credit card or debit card has the advantage of having a limit for this type of expenditure. This expenditure can be reduced if the first aims to save or going through adverse or uncertain circumstances. Continue reading How to budget a household: