A personal or family budget is when you tell your money where to go, instead of looking at where it went
Dave Ramsey
What is Personal or Family Budget?
A budget (from the Old Norse bougette - purse, bag, money bag) is an estimate of the income and expenditure of a given entity (family, business, organisation, government, etc.) set for a certain period of time, usually a year. A personal and family budget is usually a spreadsheet in which monthly income and expenses are entered.
7 Reasons to keep a Family Budget
1. Get your finances in order.
Start recording expenses by category. For example, groceries, transport, clothes, recreation, utilities, credit payments. By recording each expense in its own category, you will easily find the weak points, the causes of financial drains, you can adjust your personal or family budget.
2. Form financial objectives.
We always want to buy something. But we don't always buy it. Sometimes we stop right at the beginning of the journey, sometimes we stop one step away from the result. Just wanting is not enough. You need a goal: if you have a good idea of what, how and when you're going to do it, your chances of success increase significantly.
3.Developing discipline in money management.
Bruce Lee said: "Discipline is not restraint. It is the cutting out of all unnecessary things." The quote applies to many different areas of life, including personal and family finances. It does not mean that you should cut everything possible from yourself. It means that you should refuse to purchase unnecessary, unplanned things.
4. Keep your spending under control.
A modern person's life is full of expenses that are hard to keep track of. Subscriptions, services, bills paid, utility bills and more. You know, of course, how much you spend on one thing or another individually. But the total amount of "small" spending will show that your money is actually flying into a bottomless pit. Carefully analysing and counting the amounts you spend is a sure step to filling that hole.
5. Save and grow capital.
Starting from a small level, you will gradually notice that your piggy bank gets fuller and fuller. Or, for example, you already have a significant amount of capital and you want to make sure that the money doesn't go to waste, but works as efficiently as possible. Of course, budget planning will help. So, step by step, you increase your capital. It's no longer a profit-seeking, but a calm and judicious capital management.
6. Reunite the family.
Not everything in family relationships is decided by money, but we can't deny that the cause of many family misunderstandings is money. There is no pill that can solve all family budget problems. However, there is a way to prevent such situations. This tool is family budget planning. Keeping a budget will get rid of the feeling of uncertainty, give you confidence in the future. Families may have different concepts of normal income/spending, but when you are confident in yourself and your life companion(s), you know that you can provide for your children, take care of their parents, there will be no more conflicts about money.
7. Achieve financial freedom.
As a person with goals and motivation to grow, you're unlikely to let all your funds sit idle. Of course, you'll decide to invest (it's best to invest in something you know a lot about). This way, you'll have a stable passive income that will allow you to enjoy life. This is true financial freedom: you have multiple sources of high income and you don't have to worry about whether there's enough money for whatever you want. If you change your approach to money, you will change your mindset. There will be confidence in the future, freedom in decisions and creative ideas.
Try starting by simply counting expenses by category, gradually developing financial discipline and building up capital from the funds freed up. The path to financial freedom is paved with a systematic approach, competent allocation of funds and long-term work on yourself!