Mastering Your Money: The Ultimate Guide to Family Budget Planning

Becoming wealthier doesn’t necessarily mean finding a higher-paying job or new income sources. Instead, it’s about learning to plan your budget and manage your finances effectively. We’ve consulted with financial literacy expert Olga Murashevich to bring you insights on how to do this correctly and avoid common mistakes. Plus, discover how the Nova bank card from A1 and Alfa-Bank can help you take the first step towards financial literacy by offering a 50% discount on subscription fees for most popular A1 tariff plans.

Why Budget Planning is Essential

Contrary to popular belief, budget planning can indeed help you become wealthier. It initiates processes that lead to financial growth. However, it’s crucial to understand that becoming wealthier isn’t just about earning more; it’s about accumulating assets like savings, property, and more.

Olga Murashevich, a financial literacy expert, shares an example of a young woman who was convinced she couldn’t afford an apartment. Through budget planning, they discovered that if she had started saving three years earlier, she would already be considering various options. Budgeting helps you understand your financial situation, organize your financial flows, and control them. It’s the first step for anyone looking to improve their financial health.

Who Needs to Plan a Budget?

Budgeting isn’t about restrictions; it’s about maximizing both emotional and material benefits from your income. For instance, if you love buying coffee from cafes, budgeting can help you realize how much you spend monthly. You can then set a reasonable limit and save the rest, allowing you to enjoy your coffee while also saving money.

Budgeting is beneficial for everyone. It can help one person stop overspending, another get out of debt, and another move towards a financial goal, whether it’s a summer vacation or buying a house in ten years.

It’s also important to differentiate between a budget and a financial plan. A financial plan can span years or even decades and should include financial goals and strategies to achieve them. A budget, on the other hand, is typically planned for a shorter period, usually a month, and reflects financial goals as separate expense items.

How to Create a Budget

Start by listing your planned income and expenses, including strategic goals. Throughout the month, record your actual spending in categories like groceries, entertainment, and more. Regularly analyze your data to ensure you’re staying within your planned limits.

For example, if you planned to spend $1000 on groceries but have already spent $600 by the seventh day of the month, you can adjust your spending or plan more realistically. At the end of the month and year, review which expense categories are the heaviest and whether this aligns with your priorities.

Budgeting Tips and Rules

There are many budgeting tips online, from using envelopes for different goals to strictly following a spending plan. The best method depends on your individual situation. High-income individuals with stable finances may only need to track current expenses, savings goals, and irregular large expenses. Those with lower incomes or financial instability should categorize all expenses, such as groceries, utilities, entertainment, and more.

Two essential rules for everyone:

Save 10% of any income. This won’t significantly impact your current lifestyle but will yield long-term benefits. For example, these savings can help cover unexpected expenses or seize life-changing opportunities.
Identify what brings you joy and include it in your budget. Whether it’s a small treat for a $600 income or something larger for a $5000 income, it’s crucial to avoid long-term deprivation, which can lead to overspending.

For more insights on financial literacy, follow Olga Murashevich on Instagram.