Planning a family budget is the number one rule for achieving balanced finances. It is through this tool that we can assess where our money comes from and where it goes.
In addition to serving as an excellent reviewer of our spending, the family budget allows us to understand whether we have the capacity to increase savings and which categories consume more of our money.
How to make a family budget?
1- Record all expenses
After all, where does your money go? Bring the family together so they can budget together. If you have small children, do not leave them out. It is important that they be part of this planning so that they become aware of money issues. The first step is to make a survey of all expenses, from home mortgage to coffee.
To make it easier, you can split your spending list into two categories. One with fixed expenses and another with variables. This exercise will help you realize the value of expenses that are not considered essential and, in this way, you will know where you can reduce your expenses. In this step, it is also important that you record your sources of income.
2- Sort by categories
Once you have your list of expenses, you must organize by categories so you can identify how much you spend on each one.
In this step, you can also set savings goals, in the short or long term, for each category.
3- Set limits for each category
The previous steps are not exactly a budget. These are before a cash flow map, where only the cash receipts and withdrawals are recorded. It is only when we set the amounts for each of the categories that we are making this map into a family budget. After the first month of evaluation, we can stipulate for the following months how much we have to spend in each category.
Do you plan your family budget?