Many people establish a monthly household budget and control their finances. Some people can cope well financially, while others are experiencing serious debt problems and have to cut on living expenses drastically. It is not advisable to hit the shops, spend extravagantly and then try to figure out a way to make it through the month.

WHAT IS A HOUSEHOLD BUDGET?

The last day during the month is usually exciting when we get rewarded for our hard work. This is also the time when you have to draw up a proper budget in order to control your spending. A household budget is a financial plan that monitors your income and expenses.

A proper budget begins with an income and makes provision for debt and living expenses. You can create a household budget on a computer spreadsheet do not delete it once you are done. It can come in handy for future financial planning.

PLAN YOUR FINANCES

Create a household budget that is simple to read and easy to keep up to date. Here are guidelines how to go about it:

• Create categories under "living expenses" such as rent, education, transport, utilities, groceries, recreation, savings, maintenance (vehicle and home), insurances, taxes et cetera.

• Create categories under "accounts" or "bills" such as vehicle, clothing store, credit card, mortgage, personal loans, student loans and so forth.

• Under the latter category, you can create two extra columns, one for the outstanding balance and the other column for the interest rate the lender is charging you. This is a good reminder why you should avoid using a credit card or not apply for an additional amount on an existing loan.

If you can pay extra money towards your accounts, you can give priority to the higher interest rate accounts. It is good and inspiring to watch how your debt decreases every time you made your payments. Very few people read their account statements. The "minimum payment due" section is often the only part people read.

REWARD YOURSELF

Living strictly according to the guidelines a household budget is very rewarding, but can become boring. It is necessary to treat yourself. You can still enjoy a concert or a dinner. The idea is that you have to make educated money decisions by eating out less and choose a movie you really would like to see.

We are all knowledgeable about our spending habits and can learn where to cut down. It becomes a lifestyle to keep track of your spending at all times. It remains a good idea to leave your debit and credit card at home when you go out and to take cash with you. A limited amount of cash usually helps preventing reckless spending.

STAY IN CONTROL

The basic guidelines can help you to draw up your own personal budget. Not everyone has the same financial situation. Some people can cope well financially, while others are experiencing serious debt problems and have to cut on living expenses drastically. The key factor is that, whatever your specific situation; you have to stay in control over your finances. If you are knowledgeable about your money matters, excessive spending becomes less attractive.

A Household Budget To Help You Cope Financially

A Household Budget To Help You Cope Financially