okay, so we all know that making a budget is the stepping stone to leading a financially responsible life. but let’s face it, we don’t consider the changes that need to be made as we move ahead in life. a bachelor’s budgeting is very different from that of a married man’s tracker. so, as we grow in our personal and professional life, we need to stop tracking expenses like a noob and learn how to prepare a budget for long term goals.
but when it comes to family life, creating a budget for household expenses is a different ball game altogether. you are responsible for managing a budget for people who are dependent on you like your children, partner, parents, etc. here we will tackle how to budget monthly expenses for your family and with your family. a joint effort makes it easier to consider things that one person might forget. so, let’s get started.
parents, first let us look at how you can efficiently prepare a budget considering your kids’ needs, their expenses and the regular household expenses.
top budget preparing tips for parents in 2022
1. determine your total family income
first and foremost, calculate the total family income after deducting the potential taxes. you may have multiple income sources like salary, real estate, interests on investments, etc. also consider your assets that can be used in case of emergencies. let’s not forget the debts if you have any. once you have all these things cleared, it will help you to determine the goals that need to be achieved. these goals can be long-term or short-term. long-term goals like your child’s education, college fees and more. short-term goals include purchasing a new home appliance, splurging on a shopping spree or a close relative’s wedding. we can’t overlook a big fat Indian wedding now, can we? it will also help you understand how to prepare a budget to fill up financial gaps, if any, proactively.
2. prioritize your financial goal
gone are the days when an individual was happy with the same old 9-5 job with the same salary for years. now everyone wants to accelerate through their careers with flying colours of rewards and recognition. everyone is into investments and the second source of income to provide the best for their families and kids’ futures. so, it is advised to set a financial goal for yourself that will motivate you to, as a family, to strive for it and will help you prepare a budget for those goals. your financial goals could be paying all your debts, buying your own house, retirement etc. with so many options on investments like SIP, stocks, cryptocurrency, etc, it is time for you to start planning now itself. at akudo, we can help you research the best investment options for a better future.
3. magnify into your expenses
many times we don’t realize how and where we are spending our money on a monthly basis. with so many small and regular expenses, it sometimes gets difficult to keep a track of such expenditures. this also causes a hit on the monthly budget. so, you need to start looking closely into your expenses. but the question still remains on how to prepare a budget considering smaller and spontaneous expenses. well, in that case, you can set aside a certain amount for miscellaneous expenditure and at the end of the month check whether it was used or not.
p.s. party hard if you haven’t spent all your miscellaneous budget. there needs to be a time to reward yourself :p
4. distribute your income
the biggest mistake we make is that we don’t take into account the priority of our expenses. we splurge without thinking or we don’t budget our income appropriately. so as a family, the best way to cover all expenses which include necessities and luxury is to break down your income into sections. divide your income primarily into three categories – bills & necessities, savings & debts and non-essentials. decide on the breakdown percentage as per your household needs and future goals. this is how you prepare a budget that is sustainable. for newbies, below is the best way to divide your income and expenses to create a budget. it’s not rocket science.
50% of your income should be dedicated to regular bills and essentials like groceries, electricity bills, petrol, school fees, etc.
30% on non-essentials and luxuries like a vacation, shopping spree, partying, etc.
20% should go into savings, investments and monthly debts
however, please ensure that you stick to the breakdown that you have created for yourself and your family.
5. breakdown your savings
now let us talk about the best and most difficult part of making a budget. savings! however old you may be and in whatever stage of life you are in, you need to set aside a certain amount of income towards savings. these savings need to further be broken down into long-term savings, investments and emergency fund savings. long-term savings will be dedicated towards retirement plans, life insurance, college funds, your children’s wedding, etc. emergency funds will be directed towards medical emergencies or any other unpredictable mishaps or expenses. you can never know what the future holds, so make sure you are at least prepared to face it.
6. use budgeting apps
we can’t stress enough on this, but when you have a whole family budget to make, using budgeting makes your life easier. you can easily keep track of all your expenses, savings and unnecessary purchases that were made. the budgeting apps will also help you reach your financial goals and help you in ways to achieve these goals. how to prepare a budget just got easier. you can use budgeting apps like mTrakr to track all your finances.
now as a family, it is not only the parents’ job to prepare a budget and live by it. as a part of the family, it is the children’s responsibility to also be responsible when it comes to finances.
we are here to tell you ways in which you can help your family prepare a budget and set your own financial goals for the future.
6 budget preparing tips for kids and teenagers
1. help in preparing a budget
actively involve yourself in preparing the household budget with your parents or other family members. take ownership and voice your opinions and learn about finances from them. this will not only make you financially independent but will also prepare you for future financial responsibilities. it will also enable your parents to see you as a responsible person rather than an immature kid with no care in the world. you can learn how to prepare a budget with us.
2. start by setting goals
like your parents, you need to start determining your saving goals with the pocket money that you receive. the first step in responsible finance is to save money, even if it’s a nominal amount. if you want to buy an Xbox, start saving a certain amount every month without fail and celebrate the happiness of buying something on your own. thus, it is very important that you set your goals very clearly and strive to achieve them by creating a budget and goals. that Xbox will be yours.
3. ask for a savings account
ask your parents to open up joint savings account with you so you can earn interest on your savings. you can also open a neo bank account with akudo and earn interest on the same. as a minor, you can operate on custodial bank accounts and contribute towards your savings as per your budgeting plans. create a budget of saving at least some per cent of your pocket money or any other income in your bank account. start early, start wise friends.
4. use budgeting apps
the best way to track budgets and monitor expenses as a teenager is to use budgeting apps. make responsible choices and reach closer to your goals with these apps with this tip on how to prepare a budget. with budgeting made easier, you can now focus on saving and starting a side hustle of your own. you can also start looking at multiple investment options and secure your future. heavy, right? but don’t worry, it’s easy peasy.
5. track unnecessary expenses
as a young soul, splurging is like breathing, but as you step into a responsible stage of life, you can start tracking your unnecessary expenses. to follow the budget that you prepared, you need to look for cuts in your expenses that will help you achieve your goals. this unnecessary expense could be ordering in food when there is food at home, taking a cab or rickshaw when you can simply walk the distance or simple impulse buying.
6. take into account upcoming expenses
to maintain your prepared budget, you need to learn how to budget upcoming expenses. if you have any birthdays coming up, a party or any trips, etc. take into account the anticipated expense that it will incur. don’t wait till it happens and then budget it. if you budget it beforehand, you will be prepared for how much you can save and spend accordingly. better safe than sorry, right?
so, families and their kids, are you ready to take on the month with these budgeting tips? if yes, go ahead and make us proud!