Income & Expense Accounting for a Family Budget and Household accounts
Create your family or personal budget to manage your Household accounts and save money, using this simple template suitable for anyone with Income & Expense accounting.
This template is based on the management of Household accounts. In the Budget table you will be able to enter all the fixed and variable revenues and costs that you forecast to arise during the year. Reports can be generated automatically, at any time and will allow you to have an immediate overview of the accounts in their current and forecasted status.
Create your file
- Create a new file, starting from this template (Template ID +10685), using one of the methods explained.
- With the command File → File properties sets the period, the family name and the basic currency.
- With the command File → Save as save the file. It is useful to enter the family name and year in the file name.
For example "family-Smith-2020.ac2".
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 only shows the Liquidity account, or rather, the liquidity in your possession. You can customize it by changing the account number, description and opening balance.
This table contains the income and expense categories, of which you can see the updated balances at any time. 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 Planning 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.
Create your budget
Insert your expected income and expenses
Now it's time for the planning phase, you have to insert the expected expenses and revenues: go to the Budget table. The creation of the budget is really easy, you just have to enter the amounts of income and expenditure that you expect to have during the year, giving it a category of expenditure.
- In the template you already find lines for the various expenses, which you complete with your amount
- Enter the repetitive operations only once, indicating the code Repeat
If you make mistakes you can always correct, so you're sure you can make your own perfect forecast!
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 insert 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 expense 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.
Check the budgeted expenses and revenues
To complete your budget, there is only one last step left to take, which is very important to start taking into account real expenses and revenues: you have to compare the budgeted income and expenses.
This is very easy to do: just go to Report → Enhanced Statement with groups, and from the list that appears choose the report you want (usually the most useful in this case is the Annual Budget). Press OK to view the report.
Surely, the goal you want to achieve is to save as much as possible. So check the Profit and Loss Statement and make sure your income is higher than your expenses, in this case it means you are saving money, and that's good!
By contrast, if the expenditure is greater than the income, it means that you are mismanaging your money or you have made a mistake in the budget. Check to see if you have overestimated some expenses and change them correctly or choose one or more extra expenses that you will strive to reduce during the year.
Insert your transactions
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.
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 category, just like you did for the forecast a while ago. Easy, isn't it?
For each expense you can also enter the code of the cost center (family member) in the column CC1, so you can update the amount of expense for each member of the family.
Compare the forecast with the report
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 Report → Enhanced statement with groups → Yearly report compared to Budget.
When you get to the end of the year, you will have to re-plan the next one by creating a new forecast, using exactly the same procedure as before. A new savings goal awaits you!