Household Budgeting in a Nutshell
This is a guest post by Mark on behalf of ClearDebt. The ClearDebt site offers advice on personal debt including weighing up an IVA with bankruptcy.
Everyone has financial obligations and unfortunately due to the number of household expenses, some couples find themselves with a mountain of debt or not having enough money left over for savings. However, budgeting your outgoings can make the situation less stressful and will help to keep finances in check.
The common household expenses include rent or mortgage payments, council tax, insurance, and utilities which include gas, electricity, water, television and the Internet. When taking into consideration these outgoings, it is important to identify how these payments are made, such as through standing order or Direct Debits. These specific outgoings are very important and are the usual household obligations that can be related to the majority of homeowners or renters. Therefore, your budget must be able to cover these outgoings.
Moreover, there are a number of additional expenses that vary depending on the individuals and these specific outgoings relate to personal lifestyle. Of course the necessities include food and clothing, however it is important to consider how much is spent on entertainment. For example, some individuals may spend money on clubbing or having frequent holidays.
Furthermore, others may indulge in sports activities or regular trips to the cinema. These expenses all need to be taken into account and are subject to the individuals. In addition, some couples may have car payments and insurance that will be a priority. Also, child rearing requires a number of expenses so couples with young children will have to consider various costs such as food, clothing, nappies, toys and any other child or baby facilities you acquire.
Once all the expenses are identified and calculated, then the next stage is to compile the amount of income you receive. Again, this will differentiate depending on yourself and your partner’s personal wage. In addition some couples may receive benefits or Child Tax Credits which will need to be taken into account. Furthermore, you may receive financial contributions from other people or perhaps take rent payments from lodgers. Whatever your situation is, you need to calculate all the money you regularly obtain.
Once the expenses have been accumulated then a household budget can be calculated. It is more often than not that a household’s expenditure will be greater than a collective income. In this instance it is important to perhaps cut back on certain commitments which may attribute to lifestyle expenses. However, it is vital that you have enough money to cover the essential expenses including rent or mortgage payments and household bills.
Keeping to a budget may be difficult but ensuring that the important expenses are taken care of will reduce stress levels and will ultimately put you in a positive financial position. The key is to identify your regular expenditure and go from there, so you will feel completely in control of your financial present and look forward to a positive financial future.