The month has only just started, your salary has been deposited into your account, no unforeseen bills are anticipated, and there were even a few euros left over from the previous month.
This is how the monthly household budget is managed, right? Not really! It is undeniable that juggling the bills is frequently challenging, and for many families, making it to the end of the month with extra cash or no outstanding bills is a win.
The definition of goals is one element that encourages better budget management and organisation for the family, which leads to savings. Having specific long-term objectives, such as saving for retirement or buying a bigger house, as well as short- and medium-term objectives, such as holiday or getting a new vehicle, aids in the analysis and regular management of the monthly budget.
New month, new monthly household budget
Most of the time, fixed wage income comes from fixed wages, and fixed expenses like housing, education, energy, water, and telecommunications also tend to be fixed each month. Additionally, there are the yearly costs that need to be considered, such as car insurance and taxes, the IMI of the house if it is your own property. But there are a lot more flexible costs than you might think in between. These are the ones that require careful examination each month.
Spending on groceries often resembles spending on dining out and coffee shops, or even on the aforementioned electricity and water bills. However, it is not really like that, and for a strict household budget, there are a few things we can - and should - plan for at the beginning of the month:
Birthdays - They include gifts, food, cake, and a small celebration in our home. There is at least the present and the travels in other people's homes;
Parties - Higher costs are incurred for weddings, baptisms, and other special events. Fortunately, they are anticipated and planned for by the visitors in advance;
Consultations - Scheduled doctor visits, especially private ones, entail costs that can rise as prescriptions are filled, the dentist is the same;
Water and energy - There are variables that affect energy consumption in the home that we can anticipate, whether they signify a small change or a significant increase. More money is spent on heating during the autumn and winter. We also use more water during school holidays and when we are engaged in telework.
Moving from balancing the family budget to building savings requires being able to anticipate changes in expenditures at the beginning of the month, as well as additional revenues like subsidies or the IRS return.
How to organize the family budget better?
To keep all accounts under control at home, using a household budget simulator or creating a family budget in an Excel sheet is an efficient, almost "professional" method. Even keeping a notebook of our regular expenses can help you find the weekly and monthly total and this also helps find the most obscure expenses that can have a significant impact.
If you often see an article or expense, along with its value, you will eventually be able to evaluate it more accurately and may even come to the conclusion that it is affecting your budget. Coffee is among the best examples. If you purchase them for an average of 0.70€ each at a café and consume two a day, seven days a week, that comes to more than 40€ per month and 500€ annually.
All expenses count in the family budget
Whether you are managing your accounts mentally or filling out a more detailed form, you should aim for a broad perspective and always keep in mind that all expenditures, like in the case of the coffee example, count. Although the revenue column does not display any "earned" discounts or promotions and the spending column only displays what is actually spent, if you purchased items at a supermarket for half the price or if the children's clothes were on sale, these savings will undoubtedly be noted at the end of the month.
Contracts can be negotiated and improve the household budget
On the other hand, when creating the monthly household budget, there are some monthly expenses that we assume to be correct and indisputable but which actually lend themselves to reduction:
Energy - Nothing in the free market prevents us from speaking with the various companies that provide gas and electricity and assessing the possibility of switching distributors. Discounts and potential beneficial alliances (such as those with supermarket chains or oil companies) must be paid attention to, but market research is free;
Internet and television - Is the time of loyalty over? So it is time to check to see if the rival company offers a more alluring package or a unique promotion. Who knows, but this operator at least accompanies this promotion when asking for a new period of loyalty;
Credits - We can not escape this expense, but perhaps we can cut back on it enough that we do not even consider it. People who have multiple credit obligations each month have to think about consolidating their debt. It is a solution that enables you to combine all of your monthly payments into a single payment on the same date and by the same deadline, which makes managing the family budget much easier. However, after the credit cards are combined into one, the monthly fee that results from the combined previous amount is frequently lower;
Insurance - The car keeps running, we have not made any insurance claims in recent years, and the insurance policy is still fixed. Why not ask the insurance provider for a lower premium?
What percentage of the household budget should savings be?
When learning how to create a household budget, this is the part that is the most difficult. Low incomes (mostly salaries) typically make saving more difficult, but it really depends on each person's demands and way of life. A big monthly salary is not a guarantee that you will be able to save a lot of money, though. Savings should typically range from 10% to 20% of total revenues. The best way to do this is to attempt to save as soon as the salary enters the account after deciding on the amount or percentage that we want to save each month.
Savings, on the other hand, can be viewed as an investment or an emergency fund; having both is desirable. Therefore, you can start by setting up an emergency fund with a predetermined amount that is always available for unforeseen costs, and then you can start investing more in the medium and long terms with the monthly savings that you can remove from your budget.
In summary …. A family budget requires some time and commitment to create and maintain because every euro that comes in and goes out at the end of the week, month, or year can have a significant influence. To gain a genuine picture of the demands, the expense column needs to be filled out completely. However, you can also begin by lowering some variables and evaluating your contracts and associated costs. Additionally, a consolidated credit substantially simplifies the monthly monitoring of the family budget and lessens the weight of the expense column in the event that credit payments are due.