Many people make a New Year’s resolution to manage money better. But for effective household financial planning, it is necessary to know exactly how much money is being earned, and where the outgoings are. This is how to start doing this.
Calculating Household Income
It is important to decide at the start of this exercise whether to use annual income, monthly, or weekly. It doesn’t matter which is used, but it is necessary to stick to one of these throughout. Annual may be easiest, as much expenditure, such as insurance, is on an annual basis.
Calculate exactly how much money is coming into the household. Consider all earnings, including part time or casual jobs. This can be done as gross pay or take-home pay, but if gross pay is considered, an amount for tax will have to be considered when calculating expenditure.
