I wonder how many people track family finances. I suspect that a small percentage. And it is worth to do it.
I thought that being a minimalist I spend little money. I thought I buy only basic things (food, bills) and do some inevitable, necessary purchases (shoes after the previous pair worn out, compulsory car insurance, etc.).
But after the first month of writing down my family expenses I was shocked: how much money do I spend ?! Second, third and fourth months were not better.
Only a sharp look at your needs and eliminating those which were actually only listening to good marketing of products, gives a visible effect on the amounts spent per month.
I would recommend managing complete and precise family budget to anyone who wants to save for a specific goal: travel, emigration, investment.
And nowadays everyone has a specific goal, because even if you do not plan great adventures or large purchases, you probably plan to live a long life. So your aim is to collect money (or use them to buy investments), to have enough to live on when we will not be willing or able to work in our old age.
Here’s what I can recommend on the family finances management
1. Write down your all expenses and add it up at the end of the month
Collect receipts and immediately write down the amounts of purchases without a receipt eg. in the calendar on your phone.
When adding up the expenses, be sure to include things for which you pay by bank transfer, such as bills for the apartment, internet and phone.
2. Divide your purchases into categories
This division must be yours, depending on your habits, needs and goals. Do not worry if the categories of the first month of writing down your expenses turn out to be imperfect. In the next month choose others.
So far I see no need to make crazy analyzes, which require using the same categories for years. I just compare the sum of monthly expenses in the coming months and peek at some of the items.
Examples of expenses categories in the family finances:
Below the repetitive categories every month I write down list of one-time purchases. For example, do not create a large category dentist if you have this type of spending three times a year. Write down the amount below the main categories with a note, for what purpose you have paid.
3. Make the household budget management a tool to change your lifestyle to your dream lifestyle
Play with categories.
Example 1: At some point, knowing that I want to limit the sugar in my diet, I divided the category food into food and sweets. The sum appearing in this category at the end of the month motivates me to do smarter purchases. And even in the store, when some chocolate tempts me, I think that I do not want to add anything more to my expenses amounts in this category.
Example 2: I have a category plastic bags. I aim not to use them, and my Husband gets a reprimand for each one that I find on the receipt. Firstly, I am aware of our impact on the planet. Secondly, it does not make sense to pay for something you do not need – and you need two solid bags that you can buy once.
4. Set the maximum amount for which you allow yourself to buy things
Determine how much you can pay for your shoes, child’s shirt, car park. I’m introducing this method into my life. Certainly shopping with such rules is more difficult, because it is more time-consuming. But the satisfaction and your bank account balance certainly give lot of joy.
Family budget is a tool supporting saving, conscious living and minimalism
1. You are aware of your expenses
As I wrote in the introduction, I was not aware. I was sure that I buy very little. Only a piece of paper, calculator and pen showed me the truth. And it is always good to know what’s going on with you, also in the sphere of finances. Then you have control and you can plan.
2. You buy less
It sounds funny, but sometimes I do not do any nonessential purchases, because I would have… more receipts to count!
3. You save
I came to the point where I reflect on every planned purchase – do I really really need it. I count every penny – yes. I do not regret.
And all that you have not spend, you can keep in a savings account and let it grow or you can use the money to purchase a large investment or invest regularly in ideas that are expected to bring a profit.
My quality of life has not changed for worse, there is nothing I lack. This means I have eliminated purchases that do not have a significant impact on my happiness or well-being. I have eliminated unnecessary expenses – purchases that had taken my money and had not improved the quality of my life.
Do you have some other clever ideas at managing family finances, to have more money for the realization of your dreams?