Between the two of us, I have to admit that my husband manages money better than me. I know in some part of the world to be included in the ideal wife category, a wife should master the art of financial management. Well, sadly to say I am way too far from it but it doesn’t mean that I can’t contribute anything at all to our household budget plan.
When we were single, I was the one who tend to spend all the money I had which unlike my friends who spent their money on clothing, bags and all those material things, I spent my money on more intangible things: food. Many of time, at the end of the month I ended up with empty bank account, no new items in my wardrobe and bloated.
My husband on the other hand has been a champion in savings. Hence soon as we started seeing each other he became the financial mentor who shared his idea on budgeting with me (note that this strategy worked best when we were single):
1. Maintain two different bank accounts
According to him, two bank accounts at least needed to be acquired. One was for the savings account which was better off without the debit card or ATM card. Therefore the only way to access the account was by going to the branch. Another one was for the daily needs, the one that was easily accessible from wherever he was.
2. Split the income into two
Every month when he got his salary he straightly split the money into two. Half of it went directly to his savings account and it was not the amount to be disturbed on whatever reason. Another half went to his other bank account for his daily needs.
The amount that went into his daily needs account was spendable to all cost. He could brutally use that money and sucked it up to zero balance with no regrets. Why? because he knew that he had made some savings in the other account.
Of course this way of budgeting is quite rough. There is no other aspect to be considered like medical insurance, child education, house mortgage, car installment and so on. With special condition that his insurance was covered by the company he worked for, his car payment was settled and he was single, house mortgage was the only thing he needed to settle every month. Hence, this budget worked pretty well on him.
Once we got married and have kids of course the budget took off to a whole different level. Now we have many budget posts to consider: health emergency care, house payment, car payment, child education and retirement plan. Therefore with our current family income we try our best to fit all the expenses pockets. Not every time works. Some months have it flaws but this is what we can do so far.
So what are the 8 budget posts we have taken into our budget plan consideration?
1. Children education
The reason why we chose to live as an expatriate one of it is to provide a better living for our children. Education is one of it. We all know that education is not cheap. Hence we really work our ass to save some amounts for the children’s future education. We are taking an education fund plan from our bank in our home country with monthly installment and within five years we will be able to get the benefit (along with the interest) from it. But this one we would like to dedicate for their college fund. Therefore we also put some amount in our bank account for the children’s schooling fee before the college.
2. Monthly grocery
This is one of our fixed expenses on monthly basis because, duh, we need to eat, don’t we? The amount was derived from our grocery shopping pattern for couple of months before we allocate the fixed amount. Thus every month we have to try to buy our grocery without exceeding the budget allocated. Sometimes it is tough. But when we achieve our target, the feeling is rewarding.
3. Holiday plan
Don’t call this luxury but this is one of the necessity for being an expatriate. Every year we need to get out of the country, and for sure we go to our home country to visit our family and friends. Although flight tickets are provided, our expenses during the trip are on us. Therefore we try to put aside some fixed amount calculated from our expenses estimation for the trip. We don’t like to feel robbed at the end of our holiday trip so planning everything in advance surely helps.
4. Health insurance
Our medical is covered by the company my husband works for but we always need an umbrella for the rainy days. Thus we still put aside some money for health insurance at our home country which is paid on monthly basis.
This post is for our various expenses like internet connection, phone calls and transportation. We get transportation allowance which can be used as monthly payment for a new car or a leased car. We haven’t decide what we would do. Whatever it is we have put it in our budget so it won’t be considered as unusable extra money. We also allocate one pocket called Recreation every month for our weekend getaways, kids’ toys, clothing and other recreational activities. In tight budget, this pocket often gets removed.
6. Retirement plan
To be honest, it is very hard to work on this one. Most of the time we are left with none to be put in. Sure we have made some arrangements in our home country to put monthly installment for our retirement but we don’t think that it is enough and we really want to raise the bar once possible.
With all the expenses pockets piling up, it is very little to be saved in the account. However it is better than nothing at all. Sometimes, grocery budget left extra money in the month when we beat our budget. That I put as my rewards and sometimes I use it to by books or to add in the next month’s grocery budget.
8. Emergency fund
I know it sounds too much but it is necessary. But to build an emergency fund from the scratch is really difficult. One of financial advice I have read said that emergency fund should be at least double our monthly income and it should be easily accessible. To date we haven’t succeeded to build our own emergency plan. Hopefully we will.
How do you manage your household expenses? Do you have similar posts like mine? Let’s share your ideas