How to budget for household expenses

 

 

How to budget for household expenses

 

Whether you’re flying solo, living with a flatmate or significant other, or managing a houseful of kids, household expenses likely constitute the majority of your everyday spending. And, between groceries, utilities, and rent or mortgage payments, it can be hard to find ways to cut back on costs. Yet with a little discipline and some smart saving tips, nearly everyone can reduce their spending, and free up some hard-earned money for other financial goals. Read on to discover our tips for conquering your monthly expenses

 

How to manage your monthly expenses

 

Your average monthly expenses depend on a lot of factors, including where you live, the size of your household, your job status, individual taste, and lifestyle. No matter what your monthly expenses are, follow these steps to get a better picture of where your money is going and what opportunities you have to save

 

Track your household expenses

 

While some household expenses might seem small, they can really add up over time. To get an idea of what your costs are, start tracking your spending for a month or two. Note large payments such as rent, insurance, and utilities, but also non-necessities like shopping and takeout. This gives you a birds-eye view of what you’re spending each month on average. If this sounds like too much work, try opening a bank account that offers automatic spending categorization to simplify the process.

Identify opportunities for saving

 

After determining what your costs are, it’s time to examine them carefully. Cutting back on household expenses isn’t always realistic, or even necessary. However, most of us can find ways to save if we look close enough. Perhaps there are heating or internet providers who offer better rates than your current one. Do you buy a coffee-to-go every day? Try bringing one from home instead. Remember—5 or 10 euro here and there may not seem like a lot, but those savings could add up to hundreds of euros over the course of a year

Map out your savings objectives

 

Once you’ve identified your household expenses, make a plan for what you want to save for. Maybe you’re planning on moving, or want to invest more money into your retirement account. Or perhaps you just want to save up for a nice vacation. Alternatively, you can split your savings between all sorts of goals with the help of digital savings features. When you have your savings goal all mapped out, it becomes much easier to stay on track

Prioritize paying off debt

 

When identifying your monthly expenses and opportunities for saving, it’s always important to prioritize paying off debt where possible. Debt can be a burden, saddling you with unwanted stress and anxiety. Cutting costs where possible and putting that cash toward outstanding debt can reduce interest costs in the long term

Save up for a rainy day

 

Whatever the weather, it’s always a good idea to have an emergency fund. Though it’s not something most of us want to think about, unexpected events like emergency car repairs, or being laid off can hit you like a ton of bricks, so it’s smart to have a backup plan. How much should you save? Many experts agree that it’s a good idea to save up three months of living expenses for when times get tough. Need tips on saving in hard times? Learn more here

 

Top budgeting tips

 

Whether you’re looking to cut costs dramatically or simply want to get your finances in order, there are tons of tricks to help you control your monthly household expenses.  Here are our favorites

 

    Use budgeting apps and tools—Downloading budgeting apps can streamline your savings goals instantly. This might mean signing up for a bank that offers real-time push-notifications for every transaction, setting automatic transfers for specific targets, or logging your monthly household expenses manually or in your banking app. Need some help choosing the right app? Discover our recommended budgeting apps here

    Use the 50/30/20 split—For household expenses, consider the 50/30/20 ratio, where 50% of funds go to your essentials, 30% of funds go to fun and leisure, and the remaining 20% goes into your savings. If doing this monthly calculation sounds like too much unnecessary math, choose a bank account with designated sub-accounts and automatic transfers. This way, your bank can do the heavy lifting while you sit back and save