What is a household budget?

Put simply, a household budget compares a family's monthly income and expenses. The difference between these two amounts shows how balanced the family finances are. If the monthly outgoings are higher than the income, measures should be taken to reduce expenses. For example, you can check whether costs can be saved on telephone or insurance contracts. If income is higher than expenses, the difference remains available for discretionary use. In that case you must decide whether to save the surplus, set it aside for special expenses, or spend it as you please.

Household ledgers as software & print

Household budget for families A household budget gives you a good overview of your family finances. However, if the family's income and expenses fluctuate monthly, for example for the self-employed, it is probably more sensible to keep a household ledger. There are household ledgers both printed and as free downloadable software. The software has the advantage that it automatically reconciles all entered figures and you can see at a glance how much you have available to spend in any given month.

What you should consider when creating a household budget

Complete data:

It is important that you enter ALL income and ALL expenses. Annual contributions, e.g. for insurance, must be converted to a monthly amount. Seemingly small, irregular expenses like hairdresser visits also belong in the household budget. Here you should also try to bring the costs to a monthly average.

Current data:

Date the household budget and check the entries regularly for their validity. Perhaps the fees for the sports club have changed, or the insurance premiums have risen? The easiest way to update is in an interactive spreadsheet on the PC, but you can also work on paper or in a household ledger.

Check entitlement to benefits:

Maybe in addition to child benefit you are also entitled to child supplements, housing benefit, parental allowance or other state benefits? Find out, for example, at the family counseling center or the social services office about the requirements, or use one of the online calculators for additional state benefits.

Plan for surplus:

If money is left over at the end of the month, you should think about how to use it. You can set up an 'emergency fund' for unexpected repairs or similar, or you can spend the money on family treats. In that case it's important to keep an eye on these expenses too so you don't suddenly end up in the red.

How to keep track: saving tips for the family household

Pay purchases in cash:

Whether it's groceries or clothing, when you pay in cash you have the amount you spent directly in your hand and are more aware of the expense than when you pay by card. In addition: someone who has to go to the ATM first may think twice about impulse purchases.

Review contracts regularly:

Offers from insurers and phone providers change regularly, as may your family situation. Check your contracts regularly and speak to providers to see if they can offer a better deal. You can save a lot of money that way.

Keep an eye on 'small amounts':

A takeaway coffee in the morning, an ice cream now and then or a small toy for the children, a quick magazine for the waiting time — small amounts of money add up quickly. Think twice before you buy.

Image credits:

Grandfather and grandchildren save money © JenkoAtaman - stock.adobe.com

Household budget book © Klaus Eppele - stock.adobe.com