Photography: Jenna Leigh
Family budgeting puts a discipline on how you spend your combined incomes on expenses in order to avoid overspending and to prevent you from investing for the future. Start with identifying your combined incomes and expenses for the next 12 months. Not just for a month, but for a whole year. That way you can identify your seasonal incomes and also your seasonal expenses.
There are three major combined income sources: Salary, bonuses, and investments. On the other hand, expenses should be listed down by category based on priorities, such as food, housing, electricity, water and gas bills, clothing, education, public transport expenses, petrol, road tax, car maintenance, and insurance if you own your vehicle, healthcare, and entertainment.
Now, how much we allocate our income to each of the above types of expenses will of course depends on how much we earn. We need to adjust accordingly. Our expenses priorities should cover the basic necessities of survival such as food, putting shelter over our heads, clothing and paying for electricity bills.
Whether if we have the buying power to own a house or car depends on how much we can afford to pay our monthly installments to the bank or finance company that extended us a loan to buy the property and/or vehicle. If insufficient, we may need to postpone our home ownership or car ownership and allocate an expense budget for paying rent and for public transportation. Don't be discouraged if in the beginning of your career your income is barely sufficient to cover your basic needs as listed above. But as your career progresses, your income will increase more than inflation and you will have the opportunity to borrow that money to buy your home or your first car.
Please allow us to let you in on a little wisdom: as money in your savings account earns interest less than the inflation rate, it is only wise to keep money in your savings just enough for any emergency needs for the next 3 to 6 months. Any additional savings should be invested. And another thing, budgeting is only scary in the beginning. But once you get the hang of it, once you reap the benefits of planning your income and expenses, you will start to enjoy it.