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Personal finance: how to make a household budget

Setting up a household budget and getting savings started doesn’t have to be difficult. We show you how to get a handle on your personal finances, budget and savings without hassle.

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How do you make a household budget, really? How do you save money in the best way and how much should you save each month? We all probably need to take a look at our personal finances from time to time, but it can be difficult to know where to start. We show how you can set up a budget for your household and save money in a simple way.

How do you make a household budget?

When you set up a household budget, you first need to get a handle on income and expenses. You can easily do this using, for example, the Swedish Consumer Agency’s budget calculation. You can find the budget calculation on the Consumer Agency’s website.

You can also use Google spreadsheets or Excel to keep track of income and expenses. Collect the bills and account statements of the last few months and you will have a basis to use.

After you’ve got a handle on the last few months’ income and expenses, it’s time to choose a budget plan. Here we go over two methods you can try: the 50/30/20 method and the 80/20 method.

Method 1: The 50/30/20 method

Using this method, you divide your expenses into three parts: 50 percent, 30 percent, and 20 percent.

50 percent – ​​Fixed expenses

If you use this method, half of your income should go to fixed expenses such as:

  • rent
  • loan
  • insurances
  • food
  • transport

30 percent – ​​Pleasure

30% of your income goes to flexible costs such as:

  • The fun
  • Clothes
  • Travels
  • Mobile phone
  • Streaming services like Netflix, HBO, etc.

20 percent – ​​Savings and debt reduction

Finally, 20% of your income must be used for:

  • Buffer – i.e. money that you can use in a crisis
  • Debt payment
  • Pension savings
  • Investments

Method 2: The 80/20 method

This method is similar to the 50/30/20 method but involves a little less structure. It is therefore good for those of you who dislike the idea of ​​keeping track of expenses, but still want to save money every month.

The method simply involves you saving 20 percent of your income after tax in one or more savings accounts. You can then spend the rest of the money as you wish.

The advantage of this method is that you “pay yourself first”, so to speak. One tip is to make sure that twenty percent of your salary automatically goes into a savings account one or two days after the salary arrives.

You can then allocate this twenty percent to various savings – such as a buffer, pension savings and investments. One tip is to, when you have built up a buffer, put more money into pension savings. Keep in mind that the older you are when you start saving for pensions, the larger part of your income you should spend on this.

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14 unnecessary things you need to stop wasting money on.

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Sources: Buffer, The Balance, The Swedish Consumer Agency

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