We work hard to earn a living … so we need to make sure we spend our money wisely.  And that’s where a household budget comes in. 

It’s a great tool to see at a glance what’s coming in, what’s going out (and what that money is paying for) and if there’s anything left at the end of the month to put into savings. 

Before we dive into exactly what a budget can do for us, just remember what happens if we’re not tracking income and expenses. 

Without tracking our money, we might end up spending more than we’re making in a given month (or two, or three). Over time that can put us into some pretty hot water financially.  We may also spend a lot more than we’d like to believe (or remember) on things like kids activities, hobbies, clothes or even household maintenance.

Having a budget gives us control over where we want to spend our hard earned cash & also helping us save for emergencies.  Knowing we have money set aside for a certain category means not overspending and also not stressing that there won’t be enough in our account to cover it. 

It Tracks Where Your Money Is Going 

A budget simply tracks your money. You record where the money comes from each month (your income) and then write out everything you spend it on, starting with your regular monthly bills like mortgage or rent, car payments, utility bills etc. What’s left after all the bills are paid is your discretional income. 

Helps You Identify Things You Waste Money On 

This is the eyeopener!  Having it all in front of you in black and white helps you identify things you’re wasting your money on. 

It makes you reconsider if you really want to spend well over €100 a month on Sky TV or €80 on your mobile phone plan. Or how about that yearly magazine subscription to something you no longer read? Go through your expenses and reevaluate if this is REALLY how you want to spend your pay check. 

Allows You To Be Proactive About Savings 

Saving money without a budget is hard. We go in with the best of intentions at the beginning of the month, but somehow there isn’t anything left at the end of the month. 

A budget gives you a chance to be more proactive. Set aside money for savings at the beginning of the month, even if it’s just €20. Put it in the budget as a regular expense, just like you do with your other monthly bills. If you need to, open a separate savings account so you’re not tempted to spend it or stuff it into a Sinking Fund Envelope.

Ensures You’re Not Spending More Than You’re Making 

Most importantly, your budget will keep you on track and help you make sure you’re not spending more than you’re making. And I don’t have to tell you that that’s pretty important for your financial wellbeing. 

Its not rocket science … Income less Expenses equals Remainder

Don’t let the Remainder be a negative amount.

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