Income and expenses accounting with income and expenses planning.
Basic information about Income & Expense Accounting
Manage your household accounts with Banana Accounting and reduce your family expenses to save more money with your family budget.
To achieve more easily this goal you need a budget to check your household accounts! Predicting financial income and expenses has become important not only for businesses, but also for families and individuals. For this reason Banana Accounting has provided in its templates the "Budget" function, in which you can create your own one. But now you're wondering, how to make a family budget? No problem, following our guide step by step, you will be able to create your budget and start to manage your household accounts in the best way.
Start by creating a new file
If you haven't done it yet, download and install the free version of Banana Accounting 9.
You have two options to start creating your own file:
- Download the Family Budget and Household Accounts (Income & Expense) template from our website
- Open the template directly from Banana Accounting
- Menu File → New in order to search for the Family Budget and Household accounts template (Income & Expense)
- Select the Universal-English Region
- Verify that there is a check mark in the box Include universal templates
- Select Private Category
- Select the Income & Expense accounting Type
- In the list on the right select the template and click on Create
Regardless of the way used to create the file, once opened, enter your activity data into the File Properties and save the file.
Adapt accounts and categories tables
Before creating your own budget, you need to quickly adapt your account and categories to your specific needs.
The Accounts table shows the accounts for managing bank and postal current accounts, cash, receivables and payables.
You can customize them by changing the description (and/or the account number), adding the ones you need or deleting the ones you don't need. Then, for each account, insert your current availability in the Opening column.
This table includes the income and expense categories. There are also the Cost centers, which are used to know in detail the amount of expenses and income for each member of the family.
The categories are divided according to the same structure explained in detail in the Create your Budget paragraph:
- Fixed expenses
- Variable expenses
You can also edit categories and cost centers by adding new items, changing the category number, changing the order and deleting lines that you don't need.
Now it's time to create your own budget: go to the Budget table. This table will include all the income and expenses that you will have to incur during the year.
To create the budget correctly, follow three simple steps:
- Insert your income
- Insert fixed expenses
- Insert variable or extra expenses
For more technical information, please consult the documentation page of the Budget Table.
Start by thinking about all the fixed income you have and the amount of it. Salary is the main income, but there may also be others depending on your work and your assets.
Revenue may include:
- Real estate rents
- Maintenance cheques
- Bank and postal interests
Tip: Only rely on assured income.
Insert fixed expenses
Now it’s time to think about all the fixed costs. This type of expenses includes both annual and monthly expenses and you can estimate them based on those of the previous year. For expenses that vary slightly from period to period you can make an average estimate, rounding up the amount to be more cautious. It’s better to make an inaccurate forecast at the beginning of the year, and then adjust it, than to have surprises of higher expenses.
For example, to enter the monthly rent expense you must enter the start date (usually the beginning of the year), the repetition (how often this expense is repeated), the description, the amount in the expenses column and the expense category.
In the template you can already find examples of fixed expenses that you can easily modify and eliminate, according to your needs. You can still insert new items.
Fixed costs may include:
- Rent or mortgage for the house
- Taxes and duties
- Medical expenses (health insurance)
- Television fee
- Electricity, water and gas
- Transport (fuel, season ticket for public transport)
- Personal care costs (personal hygiene, household hygiene)
- Education costs (university fees, school books, newspaper subscription)
Insert variable or extra expenses
Now do the same thing, but thinking about all those expenses not of basic necessity (we can call them extra expenses), which are usually variable during the year.
Variable expenses may include:
- Meals and drinks in restaurants and bars
- Cinema, theatre and shows
- Various gifts
- House breakdowns
- Car repairs
Also in this case you have to make a presumed estimate of all the extra expenses, thinking about how many times you incur each single expense and of course its amount.
- For each extra expense, set a monthly ceiling, which is a maximum amount that you should not exceed monthly. Respecting it will allow you to keep your spending under control.
- Unforeseen expenses, such as car repairs and house breakdowns, estimate them annually, divide them by 12 and report this figure monthly
Control your budgeted expenditure and revenue
To complete your budget there is only one last step to take, which is of great importance to begin to take into account the actual expenses and revenue: you must compare budgeted revenue and budgeted expenditure.
To do the check is very easy: just go to Account1 → Enhanced statement with groups, and from the list that appears choose the report you want (usually the most useful in this case is Yearly budget). Press OK to view the report.
Surely the goal you want to achieve is to save as much as possible. Check the Result item and make sure that your income is greater than your expenses, in this case it means that you are generating savings, and that's good!
On the other hand, if your expenses are greater than your income, it means that you're mismanaging your money or you've made a mistake in your budget. Check if you have overestimated some expenses and change it correctly or choose one or more extra expenses that you will commit to reduce during the year.
It’s time to actually keep your accounts!
With the budget under control, including the "savings goal", you can start register the various real transactions of money and compare them from time to time with the expected values.
Register the transactions of the day
Daily transactions must be inserted in the Transactions table. To make a registration you must enter the date, the description, the amount in or out and the respective account and category. If for each item of expenditure you enter in the column CC1 the code of the cost center (family member), you will also update the amount of expenditure for each family member.
To help you understand how to introduce transactions, there are also some examples in the table that you can delete and edit.
Compare and repeat for a new goal
During the year you can compare at any time your current situation with the budget, to understand if and where you are spending more, in order to adapt your buying habits and save more! At the end of the year you can make the final comparison between the actual report and the budget to see if you have achieved the desired savings.
Create the control report from the menu Account1 → Enhanced statement with groups → Yearly report compared to budget.
You are arrived at the end of the year, so you will now have to re-plan the next one with a new budget, exactly as you have done up to now. A new saving goal awaits you!
Family Smith John
Basic Currency: EUR
Income & Expense accounting
|102||Post office current account||1|
|200||Current liabilities short term||2|
|201.1||Credit card John||2|
|201.2||Credit card Susan||2|
|210||Long term loan||2|
|410||Other income (General)||410|
|410.1||Interest income on bank accounts||410|
|300||Food & Dining||3|
|300||Food & Dining (General)||300|
|300.2||Wine and drinks||300|
|302||Auto & Transport||3|
|302||Auto & Transport (General)||302|
|302.1||Gas & Fuel||302|
|302.8||Service & Parts||302|
|304||Bills & Utilities||3|
|304||Bills & Utilities (General)||304|
|306||Education & Amusement||3|
|306||Education & Amusement (General)||306|
|306.1||Books & Supplies||306|
|306.7||Movies & DVDs||306|
|306.9||Newspaper & Magazines||306|
|308||Travel & Vacation||3|
|308||Travel & Vacation (General)||308|
|308.5||Rental Car & Taxi||308|
|310||Fees & Charges||3|
|310||Fees & Charges (General)||310|
|314.1||Real estate and personal property taxes||314|
|316||Health & Fitness||3|
|316||Health & Fitness (General)||316|
|316.1||Medical expenses remboursable||316|
|316.2||Medical expenses not remboursable||316|
|318.3||Maintenance and home improvement||318|
|318.7||Lawn & Garden||318|
|320||Mortgage & Rent||3|
|320||Mortgage & Rent (General)||320|
|320.3||Room and board||320|
|322.3||Babysitter & Daycare||322|
|324||Personal expenses (General)||324|
|324.3||Spa & massage||324|
|326||Pet Food & Supplies||3|
|326||Pet Food & Supplies (General)||326|
|328||Electronics & Software||3|
|328||Electronics & Software (General)||328|
|3-4||TOTAL OPERATING RESULT|
|FAM||Total family members|