The most comprehensive family budget guide: where to start so you always have money

Psychologists say that the financial issue is an important aspect of family life. Many married couples even get divorced without reaching a single concept of budgeting. Today we will tell you how the budget forms the possibilities of each family and where to start if your family is not used to keeping track of money.

Family Budget Types

All family members can earn money in a family, but you can manage the money you earn in different ways. Some people prefer to form a budget equally and use it in the same way. In some families, all family members spend their income as they see fit, without discussing personal expenses. There are families where one earns and the other spends. It is important to understand that there is no ideal budgeting option; each family may have its own model of behavior. And each of them has its own disadvantages and advantages.

In total, there are three types of family budget:

1. General or joint budget.
2. Separate budget.
3. Mixed (shared) budget.

The joint budget is formed by all able-bodied family members. All incomes of the spouses are added to a common joint boiler, from which funds are then allocated for all the needs of the family. Even 10-15 years ago, this form of financial relationships in the family was especially popular. Husband and wife brought money to the budget, put it in a single “envelope" and then took it for food, rest, etc. This format was relevant for the CIS countries.

Such a budget can take several forms, depending on the number of earners and entities that manage the money. For example:

• Both spouses work and form the budget, both manage the budget.
• Only one works, and both manage. For example, the husband works, and the wife and the child are on maternity leave, but at the same time she manages the money.
• One member of the family forms the budget, and the other manages. For example, the husband earns money, and the wife manages it.

Psychologists note that the most acceptable form of a joint budget is the first one, when both family members work and have equal rights to use the formed budget. The most difficult option is when one family member forms the budget, and the second spends it.

Example #1. The husband earns 50,000 conventional units, the wife – 25,000 conventional units. The total family budget is 75,000 conventional units. Of these, the family pays utility bills, buys food, saves for travel – 10% per month of the budget. At the same time, each family member can take from the budget for personal expenses within the framework of 2,500 conventional units without agreement.

Example #2. The only breadwinner of the family is the husband, his monthly income is 60,000 conventional units. The wife is on maternity leave, so her income is 0 conventional units. Both manage the family budget, since the money is kept in a common current account.

Now the joint form of budgeting is losing its relevance. Young people prefer to earn money on their own, without reporting to their soulmate. Experts note that over the next 10-15 years, the relevance of the common joint budget will lose relevance in society.

Advantages and disadvantages of a joint budget

Advantages:

1. Equality. Both in a pair have equal rights and opportunities.
2. Possibility to form an airbag. The family has the opportunity to save for a rainy day, expensive purchases, vacations, etc. This is how common interests are formed.
3. Budget transparency. Spouses know who earns and how much, where the money was spent.

Disadvantages:

• The inability to save money for your own needs or gifts for your soulmate. Spouses cannot save “for themselves”, since all expenses are as transparent as possible.
• With unequal earnings, spouses can reproach each other, limit the rights to use family money.
• The emergence of disagreements in cases where one earns, and both spend.

Statistics show that up to 50% of couples who manage a family budget experience periodic disagreements. Often people just can't come to a consensus. For example, someone wants to go on vacation, someone wants to make repairs, and someone wants to get a second higher education. It is impossible to implement all the tasks at the same time.

A similar problem arises if both have different income levels. Often a spouse with a higher income can limit the other half in the use of money.

The joint budget raises a number of problems. And this is due to the large number of benefits that are now. If earlier a family, even with the availability of funds, could only buy a TV set once a month or go to the Black Sea, now the choice is huge, as are the interests of the spouses.

Separate budget

A separate budget is becoming more and more popular today. It is especially common in Europe and the USA.

The essence of this format is that there is no “common boiler” in the family. Everyone earns as much as they can and spends accordingly. Each person in a pair buys what he sees fit. Joint decisions can only be made in large joint acquisitions, such as the purchase of a car, apartment, furniture, etc.

The model is convenient and shows good results, but only in families with an average and above average income. Spouses earn enough to spend money on their own needs and meet the needs of the family. If the family has a low income level, then it is difficult for it to achieve unity. Everyone does not earn enough money to cover the primary expenses of the family and still save money for their own needs.

Example. The husband earns 50,000 conventional units, the wife – 25,000 conventional units. Everyone spends money at their own discretion and personal needs, the husband saves up for a personal car, the wife – for an expensive fur coat. Food is bought in turn, and utility bills are paid in the same way. None of the family members have any obligations to the family.

This is the only possible option for maintaining a separate budget. No one forms joint capital, plans common expenses, etc.

Advantages and disadvantages of a separate budget

Advantages:

1. Everyone has the opportunity for self-realization. For example, you can send part of the money to education, recreation, sports, etc.
2. Financial independence and satisfaction. Each of the spouses is financially independent, independently makes decisions about spending. There are no additional grievances.

Disadvantages:

1. It's hard to save money for a rainy day. Each of the family members spends money on their own needs, not saving for emergency events. If both like to squander money, then it is generally difficult to accumulate a certain amount of capital.
2. Differences over who will cover the family's primary needs. For example, who should buy food, pay utility bills, purchase furniture, etc.

Not all families "pull" this format of budgeting. It is ideal for people with a stable income who have a high income, work, have reached a certain level. For couples with unstable incomes or low salaries, such a budget can cause a number of problems.

Mixed share budget

The mixed budget is a symbiosis of the general and separate budget. The format is as follows: each spouse has their own budget for their own needs, but at the same time there is a common cauldron.

The general budget is formed to pay utility bills, holidays, repairs and other global costs. In some families, food and clothing are bought by each spouse separately. Someone prefers to cover the cost of food and other basic needs from a common boiler, and their own needs are compensated from their earnings.

Example #1. The husband earns 50,000 conventional units, the wife – 25,000 conventional units. Each monthly invests in the formation of a common boiler for 30% of their income. Wife – 7,500 conventional units, husband – 15,000 conventional units. Total – 22,500 conventional units. These funds are used to pay for utilities, purchase food, as well as clothing for the child. If the money remains, they are directed to the formation of a financial pillow. Everyone spends the rest of the money at their discretion.

Example #2. The husband earns 50,000 conventional units, the wife – 25,000 conventional units. The total cauldron is the same 22,500 conventional units, but each contributes 50% of this budget, that is, both the wife and the husband invest 11,250 conventional units each month. Each member of the family spends the rest of the funds at their discretion.

The difference lies in how much each of the spouses contributes to the budget: in proportion to their income level or equally with another family member.

Advantages and disadvantages of a mixed budget

Advantages:

1. It is possible to form both a general and a personal budget, when no one is deprived, while making an equal contribution to family life.
2. Psychologically comfortable interaction between spouses, when there are no mutual reproaches and understatement.
3. Each spouse has the opportunity to personally use their funds without further cutting the family.

The key drawback of the shared budget is the emergence of disagreements at different income levels, when each of the spouses can send a different amount of funds to the common pool. There are no other obvious shortcomings.

How to calculate your family budget

Any budget consists of income and expenses.

Revenue part

Family budgeting theory distinguishes two types of income:

1. husband's income.
2. wife's income.

Each of the family members can officially work and receive a salary. There may also be a situation when only one person works in a family, and then the revenue part of the budget consists of a single source of income. When planning a budget, it is recommended that you indicate:

• The wife's income is 50,000 conditional units;
• Husband's income – 75,000 conditional units;
• Total = 125,000 conventional units.

But it is worth remembering that there is also a total family income that can be received from owning a business, renting out a shared apartment, placing funds on deposits, etc. Therefore, in some families, a third source of income is added – the common one. And the plus is that such income allows each of the spouses to use personal finances at their discretion.

In addition to income, there are also family assets . Assets are the resources a family has. They may be:

• Material: cash on current accounts, deposits, cash, currency.
• Intangible: real estate, securities, etc.

Such assets may be shared or owned by one of the spouses, who will use such income for personal needs. There may be a different situation, when the apartment was purchased jointly, then the money from renting it out will be considered as total income.

If we take into account the legislation, then there are a few simple rules:

• All personal assets owned by spouses before marriage are considered their personal property, including money;
• All assets that were obtained during the marriage are considered jointly acquired property.

Although there are exceptions to the rules, for example, an apartment that has been inherited.

In general, this is a rather individual issue, which is decided individually in each family.

Expenditure part

The expenditure part can be conditionally divided into categories:

1. General expenses (utilities, internet, food).
2. Expenses for the child: payment for school, clubs, clothes.
3. Husband's personal expenses.
4. Wife's personal expenses.

Planning the expenditure side of the budget is one of the most difficult procedures. It is important to observe the following rules:

• With any budget, you need to allocate a certain percentage of expenses to the formation of an "airbag". Let it be 5-10%, but such an article must be included in the budget. Sometimes it is difficult to understand how much to set aside: you can start small, gradually increasing such an expense item.
• Husband and wife should have personal money to meet their own needs. Depending on the type of family budget, each of the family members will initially have money for themselves or take it from the general budget. But such an article should be. It needs to be agreed upon at the start.
• The list of expenses should include unforeseen expenses. Plumbing can break down, someone gets sick, etc. If the money is not spent on unforeseen directions, then, for example, they can be put aside for a vacation.

These are three basic items that must be in the expenditure side of your budget. Regardless of personal income, standard of living and basic needs.

Further options are possible. For example, someone prefers to divide the rest of the money into envelopes: for treatment, rest, travel, food, etc. There can be an unlimited number of such envelopes. The main thing is to take into account the interests of all family members, as well as its basic needs. You should not be limited to primary needs, such as food and clothing. There should be money for entertainment, and for recreation, and for gifts to relatives and friends. If all the money is spent only on food and clothes, then life will be boring.

Family budget planning

Family budget planning is carried out for one calendar month (short-term planning). If major expenses are planned during the year, for example, repairs or vacations, then long-term budgeting can also be carried out.

It is possible to draw up a budget only on the basis of specific figures. It is impossible to build a table of income and expenses without knowing approximately their size. Each family has a different budget, so there is no gold standard for what it should look like.

Of course, now there are many software products that can be used for family budget planning (more on them below), but you can use simple Excel spreadsheets.  

This is an arbitrary table format. Include in your list of expenses and income that is typical for your family. At the end of the month, lines can be added to the compiled template, expanding the list of income and expenses.

When calculating the expenditure part, you can additionally not only indicate the value, but also calculate the percentage of each expense item. This is especially recommended for families with low and middle incomes, when it is necessary to identify sources of "leakage" of money. It might look like this:

In this case, the family spends the most on food – almost 30.5%, and also saves for a rainy day – 25%. The lowest expenses are utility bills -3.7%.

Some recommendations on the order of budgeting:

• determine the total income. It is better to underestimate them than to overestimate them. Otherwise, there may be a shortage of money.
• determine the mandatory expenses that the family must meet. These include expenses for food, utility bills, school, kindergarten, mobile communications, maintenance of a family car or public transport;
• set aside a small amount of expenses for yourself. Do not neglect personal spending. Let it be 500-1000 conditional units, but such a cost item must be;
• determine deductions for the airbag. The family must set a minimum threshold that it will allocate monthly to replenish family capital. For example, 5%.

Features of planning a mixed and separate budget

It is recommended to outline at least an approximate list of expenses that the family must fulfill 100%, assigning each task to one of the spouses.

With such planning, no one invades each other's personal space. Everyone has his own money, he spends it as he sees fit. But at the same time, everyone has some material obligations to the family. With such planning, the risk of a quarrel is minimized.

You can use a single application. Information about the settlement accounts of each spouse is entered into it, and at the end of the month it is clear what the money was spent on.

The budget of the mixed type is subject to planning. This can also be a tabular format for plotting income and expenses. The difference is only in the order of formation of specific expenses and incomes.

For example, the revenue side remains in the same format as in the overall budget.

But the cost part is fundamentally different:

• first, each of the spouses includes mandatory personal expenses in the list;
• then expenses for the formation of the general part of the family budget are included.

This is what the experts recommend. But the question arises: how to determine which part you should keep for yourself, and which part should be given away for the benefit of the family? The best way out is to form a list of obligatory expenses, determine the percentage that everyone is willing to pay for the formation of an airbag, and keep the rest for yourself.

But even here the question arises: how should the airbag be formed and the income part for the family be filled: the husband and wife share them 50 to 50%, that is, equally. Or does everyone contribute a certain percentage to cover expenses, depending on the level of their income?

For example, the expenditure part of the family budget is, according to the example, 101,500 (planned indicator), of which 51,500 are mandatory expenses, 15,300 are an airbag.

It turns out that the family spends 61,500 conventional units per month. Plus 15400 is the formation of family capital. Total – 76,900. Of these, the total family income for renting an apartment and interest is 28,000 + 1,000 = 29,000. Shortage – 76,900-29,000 = 47,900 conventional units. There may be two options here.

First option:

• husband and wife will contribute equal shares to cover these expenses – 23,950 conventional units each;
• then the husband will have 73,000 – 23,950 = 49,050 conventional units for personal expenses;
• the wife will have 52000-23950 = 280850 conditional units left for personal expenses.

Second option:

• the share that each of the spouses invests in the family budget is determined. For example, the husband has 73,000, the wife has 52,000. Therefore, the husband's share is 58.4%, the wife's share is 41.6%;
• proportionally, each covers the expenditure part of the budget: the husband – 27974 conventional units, and the wife – 19927 conventional units;
• the balance of personal funds remains at the disposal of the spouses: for the husband – 45026 USD, and for the wife – 32073 USD.

Families where the husband and wife have different income levels should use the share format for filling the budget. With equivalent levels of income, a couple can fill the budget and cover expenses 50/50.

Family budget deficit and surplus

If your family has enough money for all items of expenditure, and after the distribution of income and expenses you still have money, this is called a budget surplus . A budget surplus allows couples to use money for deposits, capital formation, or simply to make unplanned expenses.

A budget deficit occurs when there is a shortage of funds. As a rule, the situation is typical for couples with an unstable level of income or with a low level of wages. With high incomes and stable earnings, a deficit can arise only with improper planning or its complete absence.

The main mistakes in managing a family budget

No. 1. The family has not decided on the type of family budget

There is no ideal family budget: for some, a common one is suitable, for others, an exclusively separate one. But the family must understand how it will form its expenses and income. And you need to determine this at the start of your relationship.

When spouses do not understand what type of budget they are using, they cannot decide on key issues: who buys products, where to get money for repairs and recreation, how to deal with unforeseen financial difficulties, and so on.

The best solution to the problem is to discuss the issue and come to a common denominator. You can always revise your approach and change the model. For example, family life can start with a joint budget, and then move to a mixed type.

No. 2. Only one member of the family manages money in the family

A common mistake many couples make, especially after having a baby. When a woman is on maternity leave and does not have her own income, the husband considers it necessary to manage the budget on his own. And if he allocates money for his wife's own expenses, then fine. But often the wife is left without personal funds.

A similar problem can arise if one of the family members loses his job and is left without money. The issue is especially acute in families with a separate budget, where everyone is used to having a personal income. In this case, the problem needs to be discussed and a compromise found. It is important.

No. 3. The couple does not discuss financial matters

Every family has money problems. The difference between families is how such issues are resolved. They can be calmly discussed and common ground found. If the problem is constantly ignored and not solved, then over time it will only get worse. Constant scandals over money can lead to financial difficulties and even divorce.

No. 4. There are no limits on personal needs or spontaneous purchases

Often it occurs with a general or mixed format of budgeting. For example, each of the spouses contributes to the common pot, but sometimes one person makes unjustified expensive purchases or sends all the money to personal needs.

A wife and husband can send 20,000 conventional units to the common budget every month, but someone can take 18,000 conventional units from the common pool once a quarter and buy something for themselves. Therefore, it is recommended to set a limit for each item of expenditure within the framework of the general budget: for clothes – up to 10,000 conventional units, for personal needs – up to 5,000 conventional units, etc.

The main thing is to regulate such limits, especially when money is stored on a common current account or card.

No. 5. Spending more than income

Today, even a person with a bad credit history can get a loan or a loan from a bank. It is still not worth getting carried away with this and taking several optional loans.

First you need to expand your sources of income, and then your expenses, and not vice versa. Plan your life and spending based on your income. If they are not enough even for basic needs, then you need to look for a new job or additional sources of income.

Mobile applications for the family budget

You can download a mobile application, connect your bank cards to it and easily plan a budget within the established limits. The advantage of this method is that you can not only plan, but also easily analyze and find the “critical points” of your family budget. For example, what expenses were the largest this month, where did you manage to save money, etc. Here is our selection of family budgeting apps:

Drebedengi

Allows you to connect multiple users to a profile. Each of them can comment on their expenses, mark important purchases and expenses. The advantage is that all bank cards and online banking can be integrated into the system: each transaction will be automatically added to budget expenses. when paying by card, such payment will be automatically

This is a convenient and simple application with a clear interface. Minus – in the limitedness of some functions in the free mode. But the annual tariff is only 600 conventional units or 50 conventional units per month.

KeepFinance

A multidisciplinary professional level program. You can connect bank cards, current and credit accounts, deposits, etc. All SMS messages from banks are automatically pulled into the system.

The system allows you to divide the budget into many categories, for each set its own limit, the excess of which the system will warn the user. There is a function of building summary reports, intermediate reports, etc. You can use both paid and free versions.

Zen money

The difference between this program and its competitors is that you can connect electronic wallets to it. The analytical panel allows you to build reports by categories.

There is a function of building a personal and family budget.

The standard format for using the program is free. The paid version costs 1300 conventional units per year.

1Money

Convenient program with a clear interface. The downside is the rather limited free version. To connect more than two cards, you need to buy access.

Each user with access can independently add a payment to the system. The amount will be pulled into the appropriate category.

Family budget planning is a complex and important issue that must be resolved at the start. No one obliges to choose a certain type of budgeting. Each has its own advantages and disadvantages, so it is worth considering the level of income, the number of working family members, the basic needs of the family, etc.

Budget planning allows you to protect your family and improve your standard of living. At any level of income, it is important to set aside some of the money for unforeseen expenses and family capital, and plan the rest for other areas of expenses.