Do you have the feeling that money is getting out of hand? Do you feel that you are not able to save even if you try? Are you going like a headless chicken regarding your personal finances? Do you know what a Family Budget is? Would you like to have good Financial Health?
One of the ways people have to improve in any aspect of life is achieved by modeling (in my town it is called copying :-)) the best.
If you stop for a moment to think about one thing, all well-functioning organizations work on a budget. Whether they are town halls, public administrations, the State (well, maybe the last two have a lot to improve…?), sports clubs, NGOs, foundations, small companies or multinationals. All, absolutely all use an annual budget.
And if this works, why not do it with our family finances?
If you want to know what a family budget is, how to do it and how it can help you have good Financial Health, stay a few minutes and keep reading. I am sure that if you do not use it yet, it will be of great help to you.
What is the Family Budget?
If we go to the RAE, and we look for the meaning of the word budget , in its meaning 4, it indicates that a budget is the ” amount of money calculated to meet the general expenses of daily life , of a trip, etc… ”
This meaning is the one that we can all get an idea of, the daily expenses, although it already speaks to us of the expenses of a trip. It implies something extra, something that we all dream of. Who does not have a pending trip?
Notice that in the first meaning, it speaks to us of “reason, cause or pretext with which something is executed…”. This is very deep. If you have a reason, if you have a reason in your family or personal environment, using the budget will be of great help. If you want an example of why, I’ll tell you in this post.
But I am not going to stay with the meaning of the RAE, I will tell you what a family budget is for me, in a more direct and simpler way.
It is a document or a record, where you have written down your income and your family expenses. Ideally, you should do it on a monthly basis (although you could also do it weekly, fortnightly, bimonthly… or as best suits your circumstances).
Taking this family budget allows you to know exactly how much money you earn, how much money you spend and where that money will go, and most importantly, to be able to project future household expenses in advance.
Ultimately, it will give you:
- Control.
- Security.
- Peace of mind.
What Are You Going to Achieve by Making a Family Budget?
If you talk about this topic with your friends, coworkers or family members, you will realize that most people spend almost no time managing their family finances.
Therefore, at best, your personal finances are stagnant. And now you will see why I say that in the best of cases.
When I talk about Financial Health, I like to make comparisons with Physical Health. If you don’t do anything to stay in shape, if you don’t exercise, if you eat in a disorderly way and you don’t dedicate any time to taking care of your health, it’s normal that it doesn’t stay stagnant and get worse.
Well, this that in the physical aspect is very clear, does not happen the same as the financial aspect. If you want to have different results, you cannot pretend to have them always doing the same thing.
Some of the benefits that can be incorporated into your life, if you start to prepare your family budget (I assure you that it will not take more than 30 minutes a month…) you will find them from now on.
You Will Know What is Happening in Your Family Financial Life.
The first goodness that will come to your family environment when you start to keep track of your income and expenses is that you will know what is happening in your life.
You will stop going like a headless chicken and you will know exactly where your money is going.
If you feel in poor health, the first thing to remedy it will be to have a good diagnosis. In the financial aspect, that precise diagnosis will be given to you by your family budget.
You Will Put Order. You Will Have Tranquility
When you are clear about what is happening with your money, you begin to have your finances in order.
You will no longer have internal dialogues of the type “I have spent more in December, because the unforeseen Christmas has arrived”. But what is unforeseen? If Christmas comes every year in December?
The renewal of your car insurance, or the birthday of your loved ones, will not catch you by surprise.
The tranquility that is acquired when you direct your financial life is something priceless. And this, without a doubt, is given to you by managing your family budget.
You Will Start Planning Your Future
Now that you are the real owner of your money, you can start to set goals and objectives. With clear data, you can start making decisions for the future.
If you allow me, I can give you an example of what fathers and mothers begin to plan when they have their finances in order.
- They can put money aside for their kids’ education expenses.
- They decide to eliminate debt in advance.
- They are dedicated to fulfilling a dream (they travel to Disneyland with their children…)
- They plan a big purchase (the car, the renovation of the house…)
- They save and invest for the long term for their retirement .
How to Make Your First Family Budget in 15 Minutes
Now that you know what a family budget is, how important it is, and the things you can get to take your life to the next level, I’m going to dwell a little on how you should make your first budget in record time.
I know that until now you might have been thinking that this is all very well, but how are you going to start making a budget if you are not good at numbers? That if you have never done it, how will you be able to start.
Well, the first thing I want to tell you is that you should not try to make a perfect budget if you have never done it. Look better for your first family budget.
Better done than perfect. For this reason, I ask that if you still do not use the family budget as a basis for making your life decisions, finish reading this section, grab a pen and a notebook and start.
That’s why I’m going to make it very easy for you. Only two steps to make your first budget. But do it now please, then I’ll tell you why.
1. Income
This step may not take even three minutes.
Enter your monthly income here. But do not forget to apportion the income that comes to you once a year (it could be the return of the property, gifts that your family give you for birthdays or Christmas, if you have income from any harvest -very common in rural areas-, etc…) .
Do not olive either if you have some kind of income that comes to you quarterly (share dividends, for example…) or biannually (in case you receive extra pay at work)
2. Expenses
You can start with fixed expenses such as mortgage or rent payments, loans, financial, etc…
Perhaps for the rest of the expenses you have to make some kind of approximation. It is about having your first financial budget (even if it is not exact, then you improve it…). For reference, consider the following:
- Feeding.
- Clothes.
- Supplies (electricity, telephone, gas, television, heating, etc…)
- Transport.
- School.
- Leisure (holidays, outings, etc…)
- Gifts.
- Insurance.
- Medical expenses, pharmacy, etc…
- Pets.
- Training.
- Hobbies.
- Ant expenses .
Very important, as before, do not forget to prorate annual expenses such as home or vehicle insurance.
Well that’s it, you already have your first budget. From now on, what you have to do to improve it and have certain figures (not approximate as you have done to have it in record time), is to keep a record of income and expenses and once a month, take it to your budget.
It can help you with microsoft excel, do it manually or use an app. The goal itself, not the means, is what matters.
And Now the Best. Start Improving Your Financial Health
You already have truth in what is happening in your family finances. Based on this first budget (I insist, although it is not the most exact, nor the best) you begin to become aware of what you were doing up to now.
This awareness will allow you to make decisions of the type:
- Savings on the telephone line by changing companies.
- I reduce breakfasts away from home.
- No more ant expenses, in addition to money, most harm my health.
When you consider these things, do not think that the total difference is only 25 euros. Multiply the differences if they are monthly by 12, and if you have been with the same telephone company for 10 years. Make the account…
When you become aware of all these aspects, you can make these decisions to cut some spending items, especially because you have bigger goals, because you want to take that trip of your dreams and because you want to improve your Financial Health once and for all.
And now two things to finish. One: Head over to the comments and tell me how to make your family budget. Two: if you don’t, take action, remember that an ounce of action is better than a ton of intention. Make your first family budget now. You can’t imagine how your life will improve.
