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A Household Budget without Losing your Lifestyle
Many people think that if they use a household budget that they have to give up their current lifestyle. But this doesn’t have to be true! With some planning and some minor lifestyle changes you can follow a budget and still keep most of your current lifestyle. It just needs some planning! We have put together some resources to assist you when you create a home budget.
A Family Budget
You may ask: “What is a family budget and why should I have one?” It’s simple. A family budget looks at all sources of income and at all expenses. A good and accurate budget shows where the money comes from and where it goes, while dictating just how much should and can be given for each expense. And everyone should have a budget, especially if you use credit cards. Without a budget and the knowledge of how much you can spend you can get in serious problems. Everyone needs to know how much they can spend or save.
A home budget along with personal finance budgeting assures that you will have a good and healthy financial future and it will help plan for emergencies.
Before you can budget you need to know what your current status is. You need to identify your main expenses, credit debts, school loan, etc before you can start saving money for your future or spend the left over money. This is where budget worksheets come in. A budget worksheet will help you to indentify where the money comes from and where it goes. Of course there are also budgeting software tools that can help you setup your personal finance budget.
Normally these tools can also connect to your online banking accounts, making it even easier to make a budget and financial overview.
There are also some free and helpful Microsoft Excel budget templates that can help you setup your budget if you don’t want to spend money on one of the other tools.
Create Personal Budget without Losing the Lifestyle
The word budget carries for many people a negative connotation. Some people may have grown up hearing their parents arguing about the household budget or know even doing it themselves. But the necessity for a personal budget remains clear. With a budget we can plan for the worst, and in case of a financial emergency we can pay for it, without having to use credit or loans.
Budget planning can free our minds from stress of wondering if we have enough money. A good personal budget allows you to plan for the future. For instance for a car repair, home improvement or a college fund for your children’s education. A good home budget should account for all expenses, create savings opportunities, and encourage responsible money management. With applying budgeting principles, an individual can often surpass their savings expectations and maintain the lifestyle they desire.
Some Budgeting Tips
- Figure out how much of your net income is necessary for expenses (like mortgage, rent, utility, insurances, credit card payments, etc). Also calculate how much it is in percentages.
- If your monthly necessary expenses are under 60 % of your net income then you can effectively plan for your future.
- Find out and create a timeline of when loans will be paid off in full. Then calculate how much of a percentage it will add to your home budget. (For those that are above the 60%, you are know are hopefully below the 60 %!)
- If you use more then one credit card, then only try to use one and leave the other for emergencies.
- Always try to pay off the credit cards, because most of credit cards have high interest rates on them. (Try to calculate how much you pay extra on interest and you will see how much it can be.)
- Try to save a percentage for an emergency fund.
Example: A home budget along with personal finance budgeting should use approximately 60% of income to pay for all expenses. The remaining 40% should be used for building savings, fund IRAs, emergency fund and of course having fun!
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