Organize the monthly family budget, step by step

Where did all the money go so quickly? Those who do not know can find the answer by taking their own ledger or account book. In this way, you will have a better picture of your own finances and will more easily identify potential savings possibilities.

It is a classic: at the beginning of the month the financial situation of many people is still passable. But, as the days go by, fewer funds remain. It may even happen that well before the end of the month there is no money left, something that may also have to do with high inflation in many countries.

How is it possible for this to happen? This question is asked by many. And the answer may be in the pages of an accounting notebook for the monthly budget, where all income and expenses are meticulously recorded. In this way, users get an overview of their finances, identify weak points and can counteract them.

This is how this works in practice, in seven steps:

Step 1: Create the accounting notebook

Whether in an Excel table, an application or the classic way, with pen and paper, there are several ways to keep the account book. “Some will feel more comfortable with a digital format, because an app or program adds up the amounts on its own,” explains Antje Kahlheber of the Rhineland-Palatinate consumer center in Mainz, Germany.

In the case of online modalities, one should be aware that sensitive data is being entered. “Here it is important to check how data protection is handled”warns Sally Peters of the Institute for Financial Services in Hamburg. Apps or programs for this should come from a trusted source and be simple and easy to use so that users can easily incorporate the inputs into their daily routine.

Step 2: Enter regular income

Enter the amount of your salary, unemployment benefit or retirement in your accounting notebook. Income such as child allowances, housing allowance, rental income, if applicable, or other income should also be listed. Whoever has several sources of income and adds them together, will see at a glance how much money they have each month. Detail the respective amounts, both monthly and annual.

Step 3: List all fixed expenses

Fixed expenses include housing costs (rent, installments of real estate loans or other credits, additional costs), mobility and transportation, telephone/Internet, electricity/gas/water, insurance, subscriptions, broadcasting fees or association membership).

Write down in your accounting notebook or account notebook how much money you spend for each item per month and per year. Now add up the expenses, monthly and yearly.

Step 4: Survey the budget for food and free time

If you subtract the addition of fixed monthly expenses from the total amount of monthly income, you get the available monthly budget, that is, the amount left for eating, drinking, the home, leisure, etc.

Assuming that the monthly income is $3,000 and the monthly fixed expenses are $1,800, there is an amount of $1,200 left for other expenses, that is, irregular expenses.

Step 5: Write down extraordinary expenses

Write down all the expenses that you are making during the month. This includes, for example, all purchases of food and beverages, as well as household expenses, items from the drug store, clothing, and free time.

For it, gather all the purchase receipts and do not forget when paying with a credit card that you must also add these expenses in the accounting notebook. Whether it’s an ice cream, a cup of coffee or the T-shirt from the favorite store around the corner: “Small expenses add up quickly, and it’s only when each one is recorded that they catch our eye,” says Peters.

It doesn’t take much time to write down expenses. “It usually doesn’t take more than five minutes a day,” says Kahlheber.

Step 6: Take Stock

Add the irregular expenses and subtract them from the amount of your available monthly budget. In other words, whoever out of their budget of $1,200 has finally disbursed $950, will be able to allocate the remainder to savings or invest it.

Step 7: If necessary, reorder your finances

Whoever finds that with the available money it is usually negative, should assess where exactly the problem lies. Is it that expenses are temporarily high or is it something that happens over many months?

Possible saving measures: evaluate the insurance and, if necessary, adapt it to a new life situation. Or inquire through Internet portals if there is a more convenient insurer. In the case of groceries, you can also often save money by opting for the sale item or house brand.

Analyze if you have made unnecessary expenses. Or consider negotiating a raise with your employer. Those who cannot solve their economic problems on their own should seek advice as soon as possible. For those who have fallen into larger and repeated debts, debtor counseling is the first option. Some consumer defense offices also make available special spaces for debt advice. And in the counseling centers of the social assistance associations there is information on whether you can apply for special benefits.

Other Possibilities: “Even little things, like taking advantage of health insurance bonus programs or company add-ons like soup kitchen vouchers, help take the pressure off the spending side,” says Peters. (F)