Do you know how to create a household budget? Budgets can be very useful tools to manage your money and to find out where your money is going every month. The word ‘budget’ can strike terror into the average person, but once you know how easy it is to create one, you just may become hooked on this way of managing your money!
First of all, write down how much your net (after tax) salary is and if you get paid weekly or fortnightly. Now for the next two weeks, write down every cent you spend. This is very important. If you buy a coffee on the way to work every day, write it down. If you buy a newspaper three times per week, then write that down too. And don’t forget to include the groceries or if you have to pay the electricity bill during those two weeks.
Once you’ve done that, add up everything you’ve spent in those two weeks. Now look at how much your net salary is for two weeks. Have you spent more than you earned? If you spent less, that’s great!
Now it’s time to draw up your household budget. If you get paid weekly, then it will be easier if you have a weekly budget. If you get paid fortnightly, then it will be better if you have a fortnightly budget.
You’re going to have two columns, one for the item and the second column for the cost of the item. For example, you may spend $200 per week on groceries, so write down ‘groceries’ and then write down 200 in the column next to it. Continue doing this with all your expenses. Don’t forget to put in an amount for utilities, such as phone, internet electricity and water. And if you make credit card payments, don’t forget those as well.
If you’re serious about saving money, then you should always try to pay yourself at least ten percent of your take home pay, so put in a column for savings and the amount you want to save each week or fortnight.
Now add up all the amounts to see if you’re spending more than your net salary. If you are, then it’s time to get serious. Regularly spending more than you earn means you’re actually going backwards financially and that’s not a place you want to be in. Look at some expenses that are easy to cut, such as takeaway, newspapers, magazines or buying lunch at work. Instead of buying takeaway, you can make a quick meal at home, even if it’s something basic like baked beans on toast. With all the news on radio, TV and the internet, do you really need to buy a newspaper as well? If you enjoy reading magazines, you may be able to borrow them from the library or share a magazine with a friend so you’re only paying half the cost. And it’s easy to make a sandwich at home and bring it to work.
Continue to cut down on your expenses until your budget is less than your net salary. Once you’ve done this, all you have to do is stick to it! It may feel strange at first, but after a while it gets a lot easier and you’ll have the satisfaction of knowing exactly where your money is going!
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