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Need to save money for roof repairs or a summer vacation on Issyk-Kul but are always short of cash? Earning enough but still borrowing from relatives and friends at the end of the month? We all have been there. There are some simple rules you can use to manage your family budget.
1. Define your goals
“I need to renovate the kitchen” is not a goal, it is a dream. Set a specific, measurable and time-bound goal. The more specific the goal, the better. “I need to renovate the kitchen for 37 thousand soms by December 1, 20 ..” definitely looks like a goal. You can set 1 goal for different periods of your life (short-term, medium-term, long-term goals). Make them realistic.
However, there is always a temptation to put off something for tomorrow. In this case, right now, as you read these lines, take a piece of paper and write down your goal. Viola, the first step has been taken!
2. Track your expenses
If you don’t know how much you spend, start keeping the record of your finances. You don’t need much for this. Just write down all your expenses in a notebook or in an Excel file. Yes, at first this task may seem extremely tedious and boring. But this is the only way you can really understand what you spend your money on and why you are always short of it.
3. Plan your budget
When you know exactly how much money you have and how you spend it, you can move on to the next and one of the most important steps in maintaining the family budget – planning. Planning a budget is a tactic that will help you achieve your goals.
Planning helps to avoid impulse purchases and make your spending more meaningful.
4. Save money for different purposes separately
Every family should have a money box. Even if you save only 1 thousand soms every month, you will have 12 thousand soms a year later. This is not much, but sometimes it helps to avoid additional debts. If you are saving for some specific goals, it is better to save money for each goal separately.
5. Make sure to create an emergency fund
There is always a place for force majeure and unforeseen expenses in our lives. Do not forget about joint plans for a trip to warm countries or a major purchase. Sometimes it seems impossible to save money when you have plenty of problems to solve every day. But it only seems so.
Create an emergency fund or a “safety cushion” for your family. Save at least 10 percent of your income. This money should not be spent under any circumstances.
6. Reserve money for personal spending and savings
A joint budget is good and convenient. But it has one big drawback: you will not be able to make an unexpected surprise or buy an amazing handbag at the sale. We are all human, and we all have inherent little human weaknesses. An attempt to spend money on them from the joint budget can result in a fight.
Let’s be honest, men and women often don’t understand each other when it comes to personal shopping. Do you actually need those unnecessary fights and disagreements? It is much easier to allocate the amount that a partner can spend on him(her)self without asking the other partner. Want a new set of creams – please, go ahead!
7. Plan expenses for gifts and holidays
Yes, they also need to be taken into account. In 90 percent of cases, you know in advance about the upcoming holidays. Therefore, a family needs to agree about all irregular spending. A gift for a nephew’s wedding, “koshumcha” for various events, a company party – take everything into account. It is not necessary to count every cent, but try to be within your own limits.
8. Don’t borrow
This is perhaps one of the most difficult things for many people. If you don’t have any experience in maintaining a family budget, and you run out of funds quickly, you have to borrow. But if you really want to get out of debt, live in peace and happiness, stop borrowing.
The second step is to repay all the debts you have and never again use this method of replenishing your budget. Don’t have the money to buy a new shirt now? You don’t need it then. Is it a shame? Yes, maybe. But this allows you to make your family truly financially independent. In order to buy the shirt, you can use the money that you have allocated for personal expenses. At the same time, it will be a reason to think ten times before making any purchase.
Materials were taken from www.finsabat.kg