Any household budget consists of two main components: income and expenditure. The main thing is to follow the basic rule – the expenses should in no case exceed income. The accumulated debts are the enemy of the ideal household budget and your goals (buying a new car, owning a house, going on a trip). Try to get rid of them as soon as possible: return the borrowed money and say goodbye to credit cards.
The optimal household budget includes both management of expenses and handling of profits. All proceeds should be assessed for the risks they bear. For example, in which currency to keep their savings and what will happen to them if the dollar value decreases. Do not forget about the market risk if you invest the family savings in stocks or mutual funds. A rational approach is to make sure that your income is not heavily dependent on the situation of the stock exchange.
The second part of the household budget, expenses, is more painful and often exceeds income. In the battle for the family budget, the first important thing is knowledge of their spending and planning. For those who have begun to run a household budget, you can use the process of bookkeeping to keep all the records. Divide the household expenses into two parts, necessary and desirable. Necessary expenses include housing, food, clothing, and medical care. Desirable expenses include eating out, hobbies, interests, and savings.
Independent Model
An independent model of a family budget provides for the disposal of cash earned by each household member. This model can suit newlyweds, couples with equal income, as well as those who prefer to be independent.
Planning for the household budget
The household budget can be distributed in the following way:
- 50% – basic expenses, food, and home maintenance costs
• 10% – charity
• 10% – freedom fund or investment
• 10% – savings for large purchases or travel
• 10% – entertainment and fun
• 10% – unforeseen expenses
In fact, there are a variety of distribution options that you can follow when drawing up a family budget plan. Planning a family budget is necessary and useful. It helps to avoid thoughtless spending and at the end of the month, you always have money. However, sometimes there are unforeseen situations, and you have to tighten the belt.
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