4 Tips For Creating An Ideal Household Budget

Whether you are an experienced Melbourne homemaker or young and starting out, it is vital to stay on top of your game as far as household budget and finance is concerned. You will need to develop the habit of adhering to an effective family budget. It will help you to avoid common problems like paying excessive credit card interest. To be on better financial footing you simply need to document your current earnings and spending and adhere to financial disciplines –

Determine The Exact Figure Of Your Total Earning

Total earning includes all earnings, money you make from home, your salary, tips, “sideline” job, and anything you sell. If you sell homemade baked goods, rent out a part or any other property, add all these to your total annual income. In other words, you need to record all earnings from all sources in detail as you do for the expenses. Sum these monthly or weekly, as appropriate. Alternatively, you can also consider an average income for 12 months.

Create a List Of Your Expenses

All the expenses should be listed in a spread sheet and properly categorised. This will allow you to know about the exact score of your yearly/monthly expenses and bills. This will further allow you to determine the discretionary costs and regular essentials. In addition, you can also know about the essential and non-essential expenses. You need to categorize the expenses carefully in the general categories list, as mentioned below-

  • Regular Necessities such as- food, rent, gas, utilities, etc.
  • Recreation and Fun such as- trip with the kids, date nights, etc.
  • Long-Term Savings – emergency and savings accounts, etc.
  • Loans and Bills such as- medical bills, student loans, credit card bills, etc.

Eliminate Non-essential Overheads

If you end up with a negative number when creating your household budget, most likely you are overspending. The simple solution is to cut down on expenditure, although it might be a little harder to do. First, cut down the spending from the “fun” category. You must do this however hard it may be. Remember that these sacrifices will bring you the benefit of long-term stability. Pay off your debts with that money. This way you can attain better financial stability.

Don’t Forget To Insert a Row For Savings In The Spread sheet

It is important to store some money and put a portion of your earnings into savings for special occasions. This will give you more accurate picture of your household expenditure. Your monthly or weekly expenses might be immediate and pressing than long-term expenses, but an effective budget keeps emergencies in mind and incorporates both savings and expenditure.
The Final Say
Keep in mind that a budget is not static. You never know when things (expenditures) may come as a ‘surprise’. Keep trying to eliminate the possibilities of overspending (if it still exists). Budgeting can prove out to be virtuous only if it is efficient enough to manage money better. There is no point of making a budget that isn’t practical.

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