Monthly budget: how do I do it?
Between the money we earn and the money we spend is the economic growth of a person or their family, but how do we know where our money is going? Creating a de-tailed monthly budget is essential for us to know the destination of our euros and to be able to save and grow financially. Only with this is it possible to know the value of our income and expenses, and to avoid some more superfluous expenses. The unpredicta-bility of the future increasingly requires a good organization of the family budget!
Here are the most important steps to perform this task:
- Set a fixed day in the month
This first step is one of the most important, because if you are not ready to do so your goals will never be achieved. Start your budget on the first of each month or on the day you receive your salary, see which option is best for you, but get started!
- Identify all sources of income
All cash inflows must be noted so that you can start estimating those for the following months. Do not leave anything out of the list: wages, subsidies, inheritances, allowanc-es, prizes … Every euro counts!
- Identify all fixed and all variable expenses
It is important to distinguish between fixed and variable expenses and separate them into categories. After everything is properly listed, you should try to understand where you spend the most money and where you can really “cut”.
Fixed expenses are the most difficult to reduce as we cannot normally afford to avoid them, as is the case with electricity, water, gas bills, house payments, food, insurance, car fuel, communications services (Tv, Internet and Mobile phone) …
Variable expenses, on the other hand, include more specific expenses such as clothes or shoes, eating out or going to a cultural event, but also all impulse buys that often affect the budget and are not at all essential. It is about these that we must reflect more!
- 4. Balance sheet
After all the income and expenses are summed up, it is necessary to do the math and see how much is left over at the end of the month.
After doing the math, you should understand if your balance was positive, and you were able to save or if you really need to review expenses and reduce non-essential expenditures. It is important to establish savings targets so that there is no temptation to escape the budget.
To make all this planning easier, the creation of a table with all income and expenses in “Excel” is a good option, not least because it has the advantage of being able to be adjusted every month. Don’t leave your accounts to chance, a small amount every month will make a difference at the end of a year! This is a good strategy for saving and paying for your home early. Have you ever thought about it? Do not forget, we are here to help!
Carolina Carvalho – Management Team
Sample Monthly Budget Table