Saving Money: How To Set Up A Household Budget to Save Money?
Saving money is as important as earning money for your family, and setting up a household budget is the most important way to manage your family and personal finances. With proper financial planning, you can start saving money in a matter of months. Below are a few steps to set up a household budget to save money:
Step 1: Calculate Your Household Expenses
Take a piece of paper and write down your household expenses each month. Do this for at least two to three months to have an idea of how much your family is spending on a monthly basis. Write down each and every part of your household expenses including mortgage loan/personal finance/auto loan installments, utility payments including water and electricity bills, healthcare expenses, grocery bills, school/college fees, gas bills, entertainment/travel bills, etc.
Step 2: Calculate Your Household Income
On another piece of paper, write down your fixed household income. This should be the monthly income of each and every earning member of your family. Do not calculate income accrued from seasonal or temporary jobs.
Step 3: Compare Household Income With Expenses
After making a list of income and expenses items, make a grand total and compare. If the net monthly income is more than the net expenses, then you are lucky as you have extra money in your hand. Start saving the extra money in your savings account, open a fixed deposit, or buy mutual funds. If the net monthly expenses are more than net monthly income, then you need to cut down on family expenses.
Step 4: Eliminate Unnecessary Spending From Your Household Budget
If you are reviewing your household budget every month, you will definitely find out a few items where you are spending more than required. Some non-essential items you can cut down from your family budget are gifts, entertainment, long drives every weekend, drinking and dining out, etc. You can actually save this money to secure your financial future.
Step 5: Increase Your Household Income To Save Money
There are several ways to increase your household income and save money and they are:
1. Writing articles on revenue sharing portals to earn extra money.
2. Part-time office jobs for saving money.
3. Saving money on utility bills like electricity and water.
4. Walking to the office saving money on fuel.
5. Living frugally to save money.
Reducing costs, living frugally, and increasing income with a second job are the best ways to start saving money. You just need to understand where you are heading with your family finances and financial planning, but you will only be able to learn all this once you set up a household budget.