ABANC - Angolan Banking Association

The family budget is a tool that allows you to control and track expenses, manage the family income and facilitate the act of saving and investing. It involves an exercise of counting incoming and outgoing money at the end of each month and ensuring that the sum of the family income is bigger than the expenses.

As part of personal finance, drawing up the family budget is an exercise that requires discipline, self-control and commitment.

Below we present some tips on how to prepare your family budget:

• Identify all monthly income, including salaries, allowances and bonuses, interests from financial investments and real estate rental income;
• Identify all monthly expenses, including rent payment, water and electricity consumption, food, shopping, cinema;
• Group the expenses into three categories, to facilitate their adjustment:

1. Fixed expenses - expenses that must always be payed, such as rents, fees, expenses on outstanding loans, insurances;
2. Variable expenses - expenses that must be paid, but whose values vary according to the choices made by the household, such as food expenses, water, gas and electricity;
3. Unforeseen expenses - expenses that can be reduced or eliminated (as concerts, trips) and unexpected expenses (health expenses, fines).

• Assess your financial situation by adding all income and subtracting all expenses. It is advisable that a balance between earnings and expenditures is reached;
• Develop your household budget on a monthly basis, considering an annual perspective of income, expenses and savings goals:

1. Avoid income overestimation;
2. Avoid expenses underestimation;
3. Set an amount to save each month, which should be treated as a fixed expense;
4. Plan your budget in order to achieve saving goals.

Find a model for the monthly family budget in Excel, which can help you to plan and control your personal finances to achieve your saving goals. See here »

Note that the proportion of each type of expenditure in the family budget is relevant. The higher the representativeness of fixed costs on the total expenditure, the less the margin to adjust your budget in order to increase your savings or deal with any unexpected loss of income.