Like many people, you may feel you work all the time but never have enough money to pay your bills and make ends meet. Creating a household budget will allow you to determine where your money goes and provide a comprehensive method to track and plan your spending. Managing your household finances can help you avoid drowning in debt and help you save for your future.
Make a list of all your regular spending. Unless you are diligent enough to write down your purchases as you make them, try to save all your receipts to compile a list of everything you buy. Go over your past months’ bills and statements to determine how much you normally spend on utilities, recreation, credit card purchases, entertainment, insurance and mortgage payments. Try to account for all your spending, creating a miscellaneous or petty cash amount for small, incidental purchases you make every month.
Use your list of expenses to create a monthly household budget. Make a column for the amount you intend to pay toward bills and purchases. Using your past records and receipts, fill in the average monthly amount for each item. Include a column for the amount you must save or invest every month to help you meet your retirement goals. Determine how functional your budget is by subtracting your projected expenses from your monthly income. If your expenses outweigh your income, trim your budget by cutting back on unnecessary items.
Keep track of your actual spending by writing down every purchase you make and every bill you pay. Place the actual figures next to your allotted amounts on the budget sheet. In the beginning, try to log your spending every day to help you keep within your budgeted amounts. Overspending on groceries one week may mean purchasing only generic or sale items the following week.
Managing your household finances may seem constricting at first, but in time, this practice can provide more freedom by helping you crawl out from under your debt. Use any unspent money to pay down your mortgage or set aside for future goals, rather than throwing it away on unnecessary items. By strictly managing your household finances, you may find you can save enough money to help you purchase your dream home or go on a long-awaited vacation.
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