BUDGETING FOR THE HOUSEHOLD

One of the essentials of money management and wealth accumulation is the budget. A Budget is a plan that outlines an organization’s financial and operational goals (Ask.com). There are two of my favorite words: Plan and Goals! The budget is a guide that shows how our money is spent and one important thing to realize is that it does not only play a role in business organizations, but plays a fundamental role in personal wealth building.
The household should have a budget that shows how the money is distributed daily, weekly, monthly and yearly. This serves several purposes:
• It allows us to see how our salaries are distributed to bills, savings etc.
• It allows us to recognize areas of over-spending.
• It allows us to see how much we save.
• Thus allowing us to make projections for vacations, investments, business and personal ventures.
• It gives us a sense of having control over our finances instead of us not knowing ‘where it all went’.
Having a budget is easy, but all too often we make unrealistic projections, which force us to break the budget. The result is similar to breaking our New Year’s Resolution…do it once, it becomes easy to do again, and again, and again…
We don’t want this. We want a budget that is a realistic blueprint of our spending habits. Yesterday I designed a simplistic budget outline (my husband hates when I get complex), so I thought I would share it with you:

In this budget, we allocate one checking account for all our bill payments, so we ‘pool’ the total monthly projected expense into that account, ensuring we don’t ‘dip’ into it for anything BUT the planned expenses. It also allows us to curb our ‘entertainment’ spending; If it goes beyond the projection, then something else has to give: groceries or fuel (not the bills, or course), but this give-and-take method keeps the expense budget within the projected range.
Of course this is just the method that applies to our household. Each family is unique in its expenditure patterns and needs. Perhaps it is a single- income household, perhaps the family includes children… The family may even choose to allocate one person’s salary to handle the bills, while the other goes into savings. Perhaps each person is given the responsibility of individual expenses. Whatever the arrangements are, the fundamentals exit:
• Allocate AT LEAST 10% of the GROSS salary toward UNTOUCHED saving.
• Force yourself to save otherwise also. My husband and I have a ‘dollaaday’ jar that we MUST put $1 in daily. After is accumulates, we deposit it in the savings account.
• Save and invest your personal money also (my opinion).
• Your expenses should NOT exceed your income.
• Do not underestimate your expenses; it will cause you to continuously break your budget.
• Review your actual spending at the end of the month and see how closely it resembles the projections.
• Make necessary spending and saving adjustments to ensure a wealthy future!