5 Tips to Better Organize Your Family Budget

Do you want to know how you can control your expenses more efficiently? Do you know what you should prioritize when it comes to saving? Well, don't worry, because in this article I'm going to answer these and other questions you often have. In addition, I'll give you 5 infallible tips to optimize the organization of your family finances.

The general public has serious economic and fiscal deficiencies due to the little or no learning in economic matters offered in institutes and universities. Financial education should be a recurring and obligatory subject in educational institutions since lacking it can cause difficulties when making correct (or at least assertive) decisions that positively affect the family economy.

It doesn't matter if you live with a partner, have children, or even if you are single and don't have many obligations; knowing how to organize your personal finances will help you overcome any unforeseen events in the future.

Don't miss out on the best tips to organize your family finances in the best way possible, by learning financial education.

Table of Contents

Why do you need to organize a family budget?

First of all, you need to understand the definition of a family budget so that you can create one accurately.

A family budget is a useful tool for organizing your capital and controlling your monthly expenses in a more efficient way, as it helps you plan your monthly payments and have money left over to cover unexpected expenses.

In other words, it gives you a forecast in advance of what you are going to use the money you earn for. It is a great support for planning your family finances effectively, and it is extremely important to do so, since it allows you to manage and cover everything you had planned.

In fact, the large number of debts that are acquired originate where there is no planned family or personal budget and, consequently, there is a misuse of assets.

Not being clear about what your expenses will be can result in non-payment of rent, late payments on commitments and affect your reputation.

Therefore, managing your assets well allows you to know what income and expenses you will have and in this way not to squander, thus avoiding unnecessary worries and not living “with the rope around your neck.”

What are the benefits of planning family expenses?

Now that we have analyzed how useful it is to organize a family budget, whether you are single or live with other members, I will explain the great benefits you get from having all your expenses planned.

Better control of expenses and prevention of taking on unnecessary debts: When you have an organized family budget, it will be much easier for you to keep track of all your cash inflows, freeing yourself from debt and making it to the end of the month more relaxed.

Allowing you to avoid unnecessary waste: Have you ever made a purchase that you later regretted? This will no longer be a problem if you have a family budget organized with the amounts allocated for the expenses you are going to make.

Evaluate in a better way how and on what basis we spend our assets: Preparing a family budget allows you to record all your payments more accurately, helping you to adjust your expenses and avoid those that you see as unnecessary and superficial.

Identify surplus money: Once you have drawn up your family budget, you may be surprised to find that there is a portion of your assets that is left over. You can use this surplus to save, which will be very useful.

What you should keep in mind when organizing your family finances

To know how to organize your household finances, it is important to keep in mind that the main objective of making a family budget is to save . This way, you will be able to anticipate any inconvenience that may arise in the future.

Promoting a culture of saving helps everyone in the home see how important it is to manage money well and will ensure that this habit extends to other aspects of life in a positive way. For this reason, it is important to learn about financial education.

Now that you know what to consider for efficient organization of the family economy, it is important to classify household expenses intelligently as follows:

Necessary fixed expenses: These are expenses that are included in your calculation as mandatory payments every month, for example rent for your home, services such as electricity, water, gas; bank loans, payment for a course you are taking, etc.

Variable necessary expenses: These are mandatory payments that can be reduced if you know how to monitor your consumption.

For example, using LED light bulbs or unplugging appliances that you are not using are ways to reduce your household budget.

It is also important that you keep an eye on your investments in financial products.

Optional expenses: These are all those that are not essential payments and that can be easily eliminated from the budget.

An example of this is eating in bars and restaurants, buying movies, tobacco or going to the cinema, among other activities. For this reason, you should have the need to prepare a monthly budget with expenses and income.

With this in mind, you will be able to know how to organize a family budget. Now, how to create a budget? What should you include in it?

Financial Guides

Create a family budget that takes into account future expenses and income

First of all, you should examine your bank statements, old bills and receipts, or any records and notes that allow you to know what you regularly spend money on.

With this information, you can classify the expenses you make, for example, the fee for entertainment platforms or going to the cinema, among others. Next, put the category of leisure expenses; the mortgage in fixed expenses and so on.

To do this, it is advisable to have a family meeting, if you do not live alone, and clarify with the rest of the members of the family unit how they can contribute. It is important to organize the household economy based on monthly and annual income and profits.

This way, you can create a precise budget with the help of tools like Excel, which will allow you to calculate your household expenses and income.

Also, you must remember that for something to be necessary in the estimate, it must meet three important requirements: it is necessary, it is useful, and it must be something that does not exceed the budget.

It is also important to take into account relevant elements such as food, housing, transport, health or leisure for your staff. Preparing a family budget is complex, but it will bring you great benefits.

Tip 1: Keep track of your expenses and use credit only occasionally

To do this, you can use an application that allows you to record all your expenses and thus make a budget more easily. It is essential to have a deposit guarantee fund to ensure your finances.

You should not use credit cards and bank loans on a recurring basis to avoid future financial problems.

Tip 2: Don't over-indebt yourself and get into the habit of saving

According to the National Institute of Statistics, the household savings rate stood at 3.7% based on disposable income in the third quarter, compared to 4.9% in the same quarter of 2021.

Experts advise not to allocate more than 35% or 40% of income to paying off obligations, although this will depend on each family.

To save, you must follow the 50/20/30 rule, where you will distribute your income into:

50% to cover necessary expenses
30% for replaceable ones
Put 20% into savings accounts that allow you to make a profit.

Tip 3: Have long-term goals

This refers to buying a car or having an investment fund. It is advisable to start as soon as possible with the goals you have planned.

The sooner you start paying it off, the less work it will take you to achieve it, and you will even generate extra income thanks to the interest you can earn by making money profitable in a savings account.

Also, it is necessary to consult the National Institute of Statistics, if you are self-employed, to find out the statistics and corrective measures for your sector.

Tip 4: Consume responsibly and educate yourself about finances

When buying, always compare to find the item that stands out in terms of quality-price, and avoid hiring services that you do not fully understand.

Therefore, it is important to understand concepts such as Euribor, the TIN or APR to know how banking articles work and understand even their “small print”. These points are important to know how to manage your personal finances.

Tip 5: Be cautious

It is important to understand the financial products you are using and to know the risks of credit cards and loans. It is also essential to have an emergency fund for tomorrow.

It is also advisable to examine the statements of your cards and accounts, especially if you detect any fraud, in order to notify the bank. Knowing how to clean up the family economy includes being aware of and detecting possible financial fraud.

In conclusion, organizing your family finances does not have to be a problem. By following these tips you will be able to do it without any major difficulties.