Establish your family budget

Establish your family budget

Ideally, revenues cover our expenses and even allow us to have savings. When expenses are greater than income, you should choose to cut  the extra expenses. Monthly credits debts should not exceed 30% of your income.

Do your math

Do your math

1. Select a tool

It may be a notebook or an Excel page, you can use any tool possible to record all the data needed to develop the budget.You mus be willing to put all the numbers in order. The tool of choice must remain available at all times.

2. Complete information on the tool

What kind of information should you write down? Income and expenses. To do this, have two columns in an way you can place the information in these two fields. Now you can start calculating everything in and out of your wallet. Before recording any data, take a few minutes to make it as accurate as possible.

3. Identify your income

Here you must list all the money you receive, whatever the source the source is. Go for your fixed income (salary, pension, income from other income) first and then the variables (overtime, commissions, prizes, investments, independent work, collaboration, etc.).

4. Identify your expenses

For this case, you must remember your expenses accurately, if possible, since these are made daily.

Calculation must be more or less accurate, so you should be contrasted with reality. It is best to write down how much you spend every day, if possible with supporting vouchers.
Identify your fixed expenses (rental or mortgage, utilities, school fees, household tax, vehicle tax, transportation / gas, credit cards), variable expenses (food, toiletries and cleaning tools for study) and-finally- record your extra expenses (gifts, tours, movies, outings, leisure, entertainment, etc..)

Divide each item in columns for orderly registration.

5. Manage the budget:

With the results, you must follow one of the following suggestions according to your situation.

If expenses are greater than income, it will be necessary to cut them down.

If revenues are greater than the costs, that counts as potential savings.

The first scenario is a warning sign, because if expenses exceed income for several months, it is common to assume debt to cover the difference. Then there are two ways out of the problem: cutting variables/ extra expenses or increase revenue.As the latter is more difficult, you have to use the first choice.

By +Nikos Kontorigas

About Nikos Kontorigas

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