What is a family budget?

Family budget - how you distribute income and expenses within your family. There are several generally accepted ways to manage a family budget.

We present you with step-by-step instructions on how to plan and manage a family budget:

Step 1

Select a budget planning model.

Total family budget. You pool your income, plan and pay your current expenses together. A significant drawback of this model is the inability to arrange surprises for each other.

Mixed family budget. Everyone pays an equal amount of money or the equivalent as a percentage. In this case, a significant disadvantage will be if one of the spouses gives away the entire salary and the spouse has no funds left for personal needs. In this case, you can agree that amounts proportional to income are contributed.

Separate family budget. You divide the total expenses in half, and spend the rest on yourself. The downside is that when planning large purchases or trips, you need to agree on how much contribution is required from everyone. Such a budget is easy to maintain when there are only two people in the family and incomes are approximately the same level.

Step 2

Keep track of income, expenses, and savings

You can write in a notepad or keep records in Excel, or you can use special applications, the main thing is that your way of managing finances helps you and does not create even more confusion.

Step 3

Plan your expenses

At the beginning of each month, plan your spending, calculate how much you are willing to spend on irregular expenses.

Negotiate all irregular expenses when planning your home budget to avoid taking money out of your savings. These could be gifts for birthdays, corporate events and joint trips to the movies and theaters.

It is easier to plan daily expenses for 1,000 soms more at the beginning of the month than to withdraw 10,000 soms from savings in one day.

Step 4

Create a safety net

First, get an airbag - it will help you in emergency situations - for example, if one of your family members suddenly gets sick or one of the spouses loses their job. Let this be, say, your joint two-month salary on deposit.

Step 5

Save at least 10% of your income

Open a joint savings account (deposit) and save at least 10% of your income immediately after receiving your salary. This way you will save yourself from spending money for other purposes. You can start with a smaller amount. The most important thing is to make this action a habit.

Step 6

Create several savings accounts

This is necessary so that there are no illusions that you have accumulated an impressive amount and you are using it in one fell swoop, for example, for a vacation. It is better to open several deposits and save separately for education, save for a car or save for a mortgage.

Another important step is to start investing. Investing is passive income; you don’t have to do anything to make your money work for you.

Step 7

Reduce family expenses

After 2-3 months of tracking your expenses, you will begin to get a picture of what you are spending your money on. Analyze your spending structure and think about what expenses of your family money can be reduced and what you can spend more on.

Step 8

Create a joint account

To jointly pay for utilities, buy groceries and household goods, create a joint account. And then there will be no misunderstandings that bills were not paid on time and the situation will not arise that the refrigerator will be empty.

In addition, a joint account will free you from mutual settlements: you received your salary, contributed to the general budget, transferred 10% to the piggy bank account, and what remains is only yours.

Step 9

Make a financial plan

If you make a financial plan for the next 3-6 months, it will be easier for you to cope with upcoming expenses.

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