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How to Plan a Budget for the household
Evaluate your Incomes and Expenses
To plan a budget, you need to evaluate your daily incomes, and then, compare them to your daily expenses. In order to have a positive outcome, your incomes should outnumber the expenses. If this is not the case, then, you need to implement a financial plan to balance your budget, so that you don´t spend more money than what you make.
By stablishing a budget plan, you´ll be able to take complete control of your household finances, which in turn will allow you to save money for investment or other expenses which may arise. In order to start a budget plan, you need to set out your goals.
Weekly Budget Plan
Trace Down your Budget Graphically
It´s a good start to think about what you want to accomplish from stablishing a budget plan. Consider the benefits, as well as the disadvantages. Having control of your household budget can allow you to have extra money for travel, for instance. Not maintaining a budget can provoke uncontrolled money management, leading to lots of debt.
The best way to begin a budget plan is to draw a graphical representation of your incoming money (salary and other incomes) and expenses (utilities, transportation, medical care, education, entertainment, etc.) for a given period of time. For example, a week. Now, compare your incoming money against your expenses and subtract the money you´re spending form your weekly income.
Balance your Budget
If the outcome is positive, it means that you have extra cash which can be used to clear out any debts that you may have, or open a savings account with an interest rate of up to 1.5%. It is important to remember that there should be a positive balance in order to be able to cover those extra expenses.
If the budget is showing a negative balance (money flowing out more than it is coming in), then, you have to revise your budget and detect which items are balancing your budget negatively. By knowing which expenses are taking away the cash, can let you analyse which ones you can reduce in order to balance your budget positively.
Building Confidence for the Future
When balancing a budget, you have to detect the items that are unbalancing the budget, as well as the items that you can reduce to some extent and flexibility in order to keep your lifestyle going. Some items in your budget plan may producing unnecessary expenses which you may cut off, foe example, phone calls, transportation, etc.
By taking control of your finances, you´have extra money to deal with debt, cover extra expenses, and save for vacations and retirement. This can build up confidence for the future.