A digital household budget almost sounds old-fashioned, but it is a simple way to gain insight into your income and expenses. Simple financial administration ensures that you regain control over your money. You know exactly what you get each month and how much space you have to buy things you need or want. How do you make a simple household budget in five steps? How can you budget simply? Do you have enough left over at the end of the month? Most people keep their bank statements and manage to get their bills paid on time most of the time. Although that is already a good starting point, handling money carefully does not provide insight into your monthly income and expenses. With this simple course in five steps you will easily learn to keep track of your income and expenses, so that you know exactly how much stretch there is in your financial situation.
Provide a digital household book
A good financial overview fits on an A4 sheet of paper. You don’t even need an Excel sheet, because you can download very good digital household budgets on the Internet for free or for a small fee . Start with this so that you can easily get started with your simple financial administration.
Monthly income overview: How much do you earn?
You start by writing down everything you earn or take in on a monthly basis. Make sure that you only include income for which you are 100% certain. Also make sure that you write down the income net. A gross amount is higher, but that is not what you have available to spend later. Add up all income, subsidies and other allowances and write your monthly net income at the top. This is all you have in a month, it probably won’t be more this month.
Overview of monthly expenses: How much do you spend on fixed costs and household matters?
Now make a simple overview of what you spend per month. This includes your rent or mortgage interest, insurance, electricity and any repayments on debts and loans. Add to this what you spend on groceries, telephone calls, cleaning products, drugstore items and gifts.
In addition, make an estimate of what you really need to put aside each month for more one-off, larger expenses such as taxes or holidays.
Income minus expenses: How much will you have left over or will you fall short?
When you deduct fixed expenses from income, you basically have an amount left over. That’s money you can spend on clothes, shoes, going out and other fun things. If you don’t have much left over, you now understand better why you can’t manage to spend an afternoon shopping at the end of the month. If you are left with a negative amount, you really have a problem. You cannot make ends meet on what you earn. So you will either have to look for another job, live cheaper, save seriously or even borrow. In any case, you need to do something urgently, because every month your situation will worsen if you don’t change anything.
Can you cut back on some of the items on your statement?
If you have too little left for nice things or clothes or even no money at all for more than basic expenses, you will have to cut back. You start with unnecessary expenses such as telephone calls and going out: How can you save on this? If that is not sufficient, you will have to look at expenses in the supermarket, personal care and cleaning products. Can you eat cheaper or buy less expensive brands? Can you live cheaper or smaller? Can you possibly get some extra space on a monthly basis through a personal credit?
What should you pay attention to when you want to borrow?
If you are thinking about borrowing to gain more financial space, make sure you compare providers based on what they have to offer. Not only a low interest rate or a quick loan are important. It is particularly important to pay attention to the terms of the loan. It is better not to use your house as collateral for a loan and make sure that the term of the loan is not so long that you will never be freed from the obligation. Borrowing cheaply is borrowing wisely. Make sure you choose a good loan with good conditions, which will reduce your worries instead of making them worse.