As a backgrounder, I would have to include a little story. When I was a graduating high school student, there was this Career Guidance and Counseling thing wherein we were made to take a test that would show what course we had some aptitude and inclination for. As a child who has been dreaming to be a doctor, I was expecting for results that would show me as being inclined to the sciences at least.
To my utter horror, the guidance counselor said I was naturally cut out for business and accounting. I say “horror” because as a girl who was made to serve as cashier/bagger in our little retail store for years, I felt there was nothing to love in accounting. I missed my childhood because of years of store-watching. And although my mama has trained me to count and compute and keep columnars and stuff, I did not really relish the thought of being stuck in that job for life.
I remember asking my guidance counselor for my paper so I could check if it was really mine. There could have been a mistake, for all I know. But in my own handwriting, there it was. I could not debate the fact that I had an aptitude for accounting as I had Math grades that were high enough to please my math-obsessed Dad, but inclination? Hello, lines and columns and numbers bore me.
Today, I am neither an accountant nor a doctor. What irony. But you know what, now that I think about it, darn, I could have been happier in accounting, because now that I’m a wife and mother, I always find myself making budgets, setting aside savings, making running totals and checking if everything’s in the black as far as our family and church budget is concerned.
Budgeting is like weight loss. Income – Expenses = Balance. Responsible budgeting involves keeping the balance positive. Aim for a surplus rather than deficit. To ensure that your family will not be debt-laden in the years to come, you need to make sure your expenses are within your income.
In very simplistic terms, your family income is anything that comes in – your salary if you are an employee, your net profits if you are a business owner, any pensions and gifts and other sources of income. For our family, we make it a point to give our pledged percentage of tithes and offerings to God through our church. It is the foundational secret of financial stewardship.
Every family is different and my list would not be the same as yours but I am showing this here as a way of example. Take note that the list is arranged from the highest to the lowest priority, which just means that your income should go to the first items first.
1. House rent or mortgage
– It may be you are renting or paying mortgage. Or maybe you already own your house. If you are still renting, and your paycheck comes in two payments per month, it would be wise to divide your monthly rent in half and take that amount from your salary every 15 days. I’ve done this for years using the envelope method and we’ve never missed paying the rent this way.
2. Utilities — This category includes electricity, internet connection, water, cellphone load and LPG needs. If you have observed how much you consume per item each month, it is wise to also set aside an amount before the due dates come.
3. Food — In my case, I can keep track of our food expense by:
- going to the grocery and keeping all receipts,
- going to the market with a fixed amount of cash and just counting the money that’s left so I can compute for the expense.If you do this, you will always know how much your family is consuming per given period.
4. Toiletries — If you buy these from the grocery, you can always keep receipts.
5. Fuel and transportation — Keep all receipts from the gas station and compute for the fare you and your kids spend, if they do.
6. School Expense — I only have 2 school-aged kids and thankfully, they are in public science high schools and so we skip paying tuition fees. But for you who have kids in private schools, I imagine tuition would run high. School expenses would include (1) tuition, (2) school allowance for lunch and snacks and (3) miscellaneous school expense.
- There are expenses that are recurring and regular like school allowance and fees.
- There are school expenses that happen only once a year such as school uniforms and textbooks which I usually save up during the summer months of April and May.
- For college tuition, it is recommended that you start saving for that years earlier, preferably in a bank.
7. Clothing – In our frugal family, buying new clothes occurs only once or twice a year – usually at the end of the year (because we get lots of gifts from church members then) and at the end of the schoolyear (because we want to reward our kids and ourselves with something nice to wear on stage when the kids get honors). However, I am a thrifting diva of sorts and I have come home, not a few times, with unbelievably cheap thrifted clothes which look like they come from the boutique after a good washing.
8. Leisure – Leisure should come in low priority than the necessities above. This would include (1) dine-outs, (2) vacations and trips, (3) birthday parties — well, you know what these are. We save for family vacations a year ahead. As we don’t do birthday parties for our kids, just simple get-togethers, we can manage this one as well.
8. Appliances, gadgets, projects – As for appliances and gadgets, we make it a point to save and scrimp and buy them in cash rather than have them on credit.
No matter how busy I am, I always sit down once a week or two to make an audit of our family income. As I am not an accountant and I don’t know Excel, I just do it manually.
Keeping track of your income, expenses and balance may seem tedious but it is the only way you could manage your family finances well.
Lastly, just do the math. Income minus expense should equal something positive, not negative. You’ll be okay that way.
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