Does the word “budget” make you cringe in horror? Everyone in Singapore knows that it’s important to introduce their spouse in creating a household budget, but almost no one does. Making a budget doesn’t have to be a painful experience. Here are three easy steps to follow that will help you manage your household finances.
It’s important to understand that when creating a family budget the whole family should be involved. You’re not doing it alone. Everyone in the household including your spouse and children should be involved when discussing a budget. It’s important that everyone knows what your family’s financial goals and priorities are.
Next is the key step. You want to track every single cent that you spend. This doesn’t have to be complicated or hard to do. A small notebook and pen is a great way to keep track of all of your purchases. Carry one around with you when you leave the house. Then just write down how much you spend every time you make a purchase. It doesn’t take long to do and will give you a nice log of where you are spending your cash.
Now you can look at your record and decide what types of purchases you and your family can cut back on. You want to cut back on your expenses so that they are at least less than your monthly income. After that, you can start putting some money aside for savings. Ten percent of your income is a good number to aim for.
Ensuring that you keep out of debt
Keeping out of debt is not easy these days, but it is straightforward. You just have to make sure your outgoings are less than your total income. Setting a budget is an essential part of this process. Without one, you will be running the risk of getting into serious debt. It’s as simple as that. A budget is the one sure ways to make sure you don’t get into debt because it states your expenditure. After all, it is the little bits and pieces of expenditure that accumulate into a bigger debt problem.
Budgets force you to face the spending habits you have developed over the years – good and bad – and without one, you cannot hope to get control over your finances. If someone were to ask you right now to write down exactly how much it costs you to live day to day, week to week, and month to month – could you do it?
In reality, it would probably take you some time to work it all out as you would need to check household bills and regular monthly expenses. In addition to that, you would need to look at any expenses that occur at irregular intervals either quarterly or once yearly.
You would also need to make allowances for additional spending during the festive season, vacations, kiddies’ parties, etc., as well as the additional interest you would need to pay on the credit card debt that you would incur over that period. On top of that, you would need to make allowances for your car maintenance such as car insurance, monthly car rental fees and etc.
And there will be lots more that comes to light! In fact, the closer you look at your regular expenditure, and the more detailed you get, the better the budget. This is why a budget is so important. Most people get a nasty surprise when they prepare a budget for the first time because they realize how much money they spend on things without even thinking about them.
Budgets are key if you want to stay out of debt. There is no suitable alternative. You can’t run a business at its best without a budget, and you can’t run a household without one either. If you try, you will fall into debt sooner or later. Why risk it?
Things to be included in a family spouse
If you are serious about becoming debt free, the first thing you need to do is to sit down and calculate once and for all, exactly how much you owe. The next thing to do is to create a budget which will allow you to plan the best way to use your income to cover your debts. When you prepare your budget, you need to calculate your total income (all the money coming in) and total outgoings (what you spend your money on). All these details must be included in the budget, which needs to be regularly updated as your situation changes.
When preparing a budget, you need to be as exact as possible with your figures. However, you may find it difficult to be exact for certain items. In these cases, such as how much money you spend each week on food and other essentials, you will have to make your best estimate and fill in the exact details as you get receipts and can make a more precise estimate. Once you get some of these figures, you will be able to determine whether you are spending too much on certain things and where you can realistically reduce your expenditure. Your food shopping is often one area where you can save a considerable amount of money because most people do not have any strict limits on their food spending.
Once again changes can only be made if you know precisely what you’ve been doing in the past and where you can make the changes in the future. It might mean that you have to completely change the types of foods that you are buying and a side benefit of doing this is often that you improve your health along the way – because you buy food that is better for you.
A budget can be prepared in a book or more effectively online using a program such as Excel, where items can be quickly added or subtracted, and totals can be added quickly. Or you can use application that tied with banks to track with your spending. Seedly is a pretty impressive app you should try! This allows you to see in a matter of seconds which direction you are going in and whether the steps to cut your debts and expenditure have improved your financial situation and moved you towards your dream of getting out of debt.
Budgeting is your way to gain control over your finances once again. In fact, it is the only way for you to gain control. It is a lot easier than you might expect and once you begin to use a budget, you will wonder how you ever managed your finances in the past without having one.