What is home finance?
Such a concept as “home finance” in our country appeared relatively recently, starting somewhere in 1994. If earlier economic research, analysis and planning concerned exclusively the financial activities of enterprises, now more and more attention has been paid to home finances. This topic has now become so relevant that it is actively discussed on Internet resources by both ordinary people and specialists. Programmers have developed special programs for more convenient management and accounting of home finances, and economists have singled out this topic in a separate category, and began to teach at universities. So what is home finance, and why has it received so much attention?
Home finances are all receipts of funds, in conjunction with their expenses in the family. For greater clarity and understanding, home finances can be compared with the finances of the enterprise. If the enterprise is managed by an experienced manager who was able to establish competent accounting, production and marketing of products, competently redistributes all revenues, some of them are directed to the expansion of production and, accordingly, to increase output, then reserve funds are created in which funds are accumulated. These funds are used to upgrade production through innovative technologies. Conversely, with inept management of the enterprise, receipts are often chaotic.
They are insufficient even to pay salaries to employees and cover the needs of the enterprise, not to mention savings. Such an enterprise has a direct path to bankruptcy. This is also the case in a family with household finances. In this regard, the family is no different from a small enterprise, only here the role of the director is performed directly by you. And the financial well-being of your family depends only on your ability to manage home finances and manage them correctly.
How to manage your home finances
Keeping your home finances is not difficult. At first, it is enough to select a simple notebook and consistently enter all your monthly income and expenses there. If the income in the form of wages for most people is often relatively stable and difficult to influence in a short period of time, then some part of the expenses can and should be regulated. You make some purchases every day, sometimes without even thinking about how important they are to you, and money has such a feature: it goes away quickly and somehow imperceptibly. From your notes at the end of the month, you can clearly see where your money went. And this will most likely not please you, since according to statistics, people spend up to 30% of their income on entertainment and unnecessary things, which are then lying around at home and gathering dust or simply thrown away.
It’s time to reconsider your expenses, to exclude from them everything that your family can do without. Replace expensive entertainment with visits to art exhibitions, parks and squares, give up lunches or dinners in a restaurant and start cooking at home, revise your wardrobe and give up new things for a while, and so on. You will be amazed at how much you will save in this way. You will have the opportunity to create such home financial assets as an emergency fund, savings and capital. Over time, you will be able to make large purchases with savings, use your capital to invest and create passive sources of income, and a reserve fund will protect your family from unforeseen circumstances.
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Accounting and planning of home finances should be done constantly, regardless of your income and financial condition. This is the only way to achieve your financial goal and ensure the family’s financial independence.
Tagged with: Personal Finance
