Planning your family budget is the first and the most important step towards the financial welfare of your family. Budget planning includes not only keeping record of the family’s income and expenses, but also planning ahead and setting clear targets. This means that by carefully planning your finances not only will you become increasingly aware of your expenses and possibilities to save, but also gain certain confidence when dealing with your regular mandatory payments, as well as managing emergency situations. Precise and detailed data on your income and expenses will enable you to manage your money in a successful and efficient manner.

The golden rules of planning your personal budget

1. Knowledge is the main precondition of success. Only by having precise knowledge of your income and spending items you will be in total control over your financial matters. 
2. The “safety cushion” for emergencies should be provided by means of accumulating savings in the amount that equals family expenditure for a period of at least 6 months.
3. The optimum amount of loan repayment should not exceed 30% of family’s monthly income.  Read more. »

In case of financially substantial purchases, it is advisable to draft a special schedule that would include the following: date of purchase, required amount of money, possibilities to set aside dedicated reserves or the costs associated with a loan. Spontaneous purchases tend to result in excessive spending.

If you use a credit card or a consumer loan to purchase certain goods, you should add the interest to the purchase price. You should also estimate the impact of such interest on your monthly expenses.

Consider including an additional column in your budget planning table in order to estimate the savings resulting from improved financial discipline. For instance, whenever you go to work on bicycle, fill out the column with the saved amount in comparison with a bus ticket or petrol costs. The results could serve as a source of motivation for further planning activities.

Consider the possibilities to reduce your spending on your hobbies without having to give up on your favourite pastimes. For instance, if you go to a gym, you might consider substituting it with morning cross-country running in the nearby park or forest. Sometimes you might substitute going to the movie theatre with staying in and watching a DVD with your family at home.

You might consider estimating the financial benefits of quitting smoking and/or drinking. One would be surprised to learn how much he or she spends each month on cigarettes or alcohol. In the long run you would also save on your health-care expenses.

You might consider estimating the financial benefits of quitting smoking and/or drinking. One would be surprised to learn how much he or she spends each month on cigarettes or alcohol. In the long run you would also save on your health-care expenses.

If most of your transactions are settled by means of cash, it might be a good idea to introduce several dedicated wallets – one for utilities, another for food etc, thus assuming a higher degree of control over your expenses. It would help you to avoid spending in excess of the set plans.

You may also follow your expenses by means and tools incorporated in your internet bank. This approach is even more efficient if you settle most of your payments with your bank card or through your internet bank.

If it is impossible to get a receipt, record the spent amount right away, for instance, by means of jotting it down on another receipt, thus making sure you do not forget about the transaction.