Draw up a budget: The idea is old – and at the same time more topical than ever. Planning assistance is needed, because the multitude of payment methods that households manage makes the overview dwindle.
Why you should draw up a budget
Never before has it been so difficult to keep track of your finances:
- Most households use a current account, an overnight money or savings account, one or more credit cards and possibly pre-paid cards.
- A large part of the payments is due monthly. Others, however, are quarterly, semi-annually or annually.
- The fixed amounts are joined by the variable ones for the lifestyle and everything that is fun – from going to the cinema to coffee-to-go.
In view of the large and small, regular and irregular, fixed and variable payments, it is no wonder that the overview is lost.
A budget brings order to finances. It tells you where your money is, how much room for maneuver you have, where you can save and whether you can afford a loan if necessary.
Drawing up a budget – what matters
A budget comprises all the revenue and expenditure of a budget. Many payments are made in different periods – monthly, quarterly or semi-annually. Please determine in which periods you want to calculate. Our suggestion: Apply your quarterly and half-yearly costs to the month.
First write down your income
Wage or salary, pension, sickness benefit, maintenance, child benefit and all other revenue
Then list your expenses:
For the apartment: rent, ancillary costs, heating costs, electricity costs, garage or parking space.
For mobility: tickets, rates for the car, gasoline, insurance, taxes, maintenance and repairs
For communication: Internet connection, telephone and mobile phone charges, GEZ, cable and Pay-TV
For the standard of living: food, clothing and body care
For old-age provision: insurances and reserves for old-age provision
For debt service: instalments for loans and for the cost of the overdrawn current account
For everything else: Contributions for clubs and associations, pets, maintenance payments and other more
For the daily expenses: Keep a record of your daily expenses including cigarettes, magazines, snacks and coffee for at least three months. You will be amazed at how the small amounts add up.
The budget as the basis for your financial management
Draw up a budget: The effort is worth it! Your budget answers important questions for your financial management:
Savings are usually easiest with variable costs. Are your expenses for the fun little things healthy in relation to your income? Now you know it and can take countermeasures if necessary.
Every household should be able to draw on a reserve for repairs and purchases. There are different opinions on the amount of the reserve. Many households save three times their net household income as nest eggs.
Deciding on a loan
Your budget tells you how much is left at the end of the month – a first indication of whether you can afford a loan. For the ultimate test, you put back for three months the amount you have to pay back in the case of a loan. If that works out well, you could theoretically start.
Become clear about your behaviour
Payments you make with your credit or debit card are forgotten just a few days later. Studies prove this. Your budget tells you where – perhaps too lightly – to leave your money.
Save on one purchase
Loans have become so self-evident that many consumers forget the following possibility: You can save on larger purchases. By the way, this is the cheapest way to pay, because there are no fees or interest rates.