Let's start with the next question, have you been counting the days until the next salary date? Or have you had an emergency, and you have not had the financial fluency to solve it? I'm sure you have. It happens to all of us because we do not organize the money and home finances in the same way that we do with the closet or the refrigerator. The best way to do this is by designing a family budget.
Designing a family budget helps to organize the estimated income and expenses that each household has during a given period of time. By capturing this information in a systematic and organized way, we will know what the difference is between the two (income and expenses) to have a final balance of the money that is available.
Sandra Velez, director of education for Qualitas of Life Foundation, recommends that when talking about money, the household must speak with everyone in the family. When designing the family budget, we must incorporate all family members, even the smallest of the house, so that from an early age they begin to distinguish income, expenses, desires, and needs, fundamental elements for the organization of household finances. Velez also explains the elements needed to plan the family budget.
Elements of the family budget
Income: all money that comes into the family
Expenses: all the money that goes out
Fixed: rent, mortgage, bank loans. They do not vary and are mandatory
Variables: food, electricity, gas, water. These can be controlled and their consumption reduced.
Needs: they are essential, we cannot eliminate them, but we can control them.
Wishes: we can eliminate them, they are expendable
Benefits of the family budget
1. Control our expenses 2. Set goals: home purchase, vehicle, vacation 3. Encourage savings: short, medium, or long term to meet goals 4. Give us occasional likes 5. Reduce family conflicts
The design of the family budget
1. Take paper and pencil 2. Get together as a family and make decisions as a family 3. Establish the periodicity of the budget: monthly, biweekly, weekly… Always the same. 4. Detail all income and, with paper in hand, detail all fixed and variable expenses 5. You establish the differences between needs and wants 6. Set financial goals in the short, medium, and long term
Smart secrets for managing the family budget
Some recommendations given by Velez are the following:
1. Remember priorities 2. Expenses cannot exceed the income 3. Consider savings: piggy banks, accounts that have not been touched to know the family's saving capacity 4. Implement spending limits: outings for walks, to restaurants, children's allowance, others 5. Make a list of memberships and eliminate those that are not needed or are not being used 6. Control the number of credit cards, do not exceed 30% of the credit limit to maintain a good credit history, and pay more than the minimum monthly amount.
The Director of Education for Qualitas of Life Foundation, also recommends saving money for emergencies, in which case will avoid asking for loans, breaking the piggy banks, or asking for help from a family member.
Qualitas of Life Foundation offers different workshops that might help you to learn more about budgeting and other financial education topics. If you live in or outside the United States, you can access their free online courses. Sandra Velez referred to the 8 Sessions Course which is an intensive Financial Education Course that covers 8 topics: credit, my finances, frauds, banking system, among other four.
Think that there are no magic formulas to manage the family budget, the financial success at home will depend largely on each member of the family. However, we can safely say that the family economy will be balanced as long as the income is higher than the expenses. If the family can assume the commitments satisfactorily and even save, it has intelligently managed its family budget.