Forming the expense side of the family budget

Expenses in home accounting are no less important than income. Every day we make various purchases, payments, contributions and so on. The source of payment for expenses is, of course, income. It should be taken into account that it must exceed costs or at least equal them. This depends on your goals and capabilities.

If income is formed from financial receipts, then expenses are costs incurred in the course of running a household that lead to a decrease in capital. They arise from our needs, the satisfaction of which sustains our livelihood. Home accounting differs from accounting of funds at an enterprise in that no expenses are made in it with the aim of making a profit.

With proper formation and recording of the expense side of the family budget you will be able to stabilize your financial flows and get rid of excesses. Expenses are divided into permanent and seasonal, as well as planned and unplanned. In addition, expenses are divided by degree of urgency and by our needs.
Let us look at them in more detail:

• permanent or regular expenses are costs incurred in every reporting period, usually in the same amount, although it may vary depending on changes in market prices in a particular area; they include monthly utility payments, food costs, transport expenses and others;


• seasonal expenses are expenses connected with the occurrence of an event that entails financial costs. For example, with the arrival of winter you need to buy warm clothes and take into account the increase in utility payments, since they include heating costs, etc. Seasonal expenses include holidays, vacations and other events;


• planned expenses are costs provided for in advance. They include all of the above;


• unplanned expenses are costs incurred when an unforeseen event suddenly occurs, such as illness, urgent trips, etc.

To put all these expenses in order, you should decide on the source of their payment, which is formed from income. For permanent expenses the main source is regular income. For seasonal ones you need to create additional savings funds. And it is best when there are several of them, that is, money is set aside separately for vacation, separately for buying warm clothes, and so on. In total, about 30% of income should go to this fund. You also need to form a fund that will be the source of payment for unforeseen expenses. You set aside a certain amount, namely 5% or more of income, as a reserve.
Such a formation of the expense side and sources of costs will let you stabilize financial flows and keep them from getting out of control even in an unforeseen situation.

The Online home accounting service makes it most convenient to keep track of expenses.