Household expenses makes most people feel overwhelmed every time the end of the month approaches. Our way of life has become increasingly demanding.
Every day, life presents us with ever more complex challenges. Bills to settle, family to feed, basic stuff to buy, taking care of our health, parting with friends etc.
All these costs we pay whether for buying a product or settling our bills are called household expenses. At many times these costs get us out of control.
Every household has many expenses, learning how to classify your expenses can be a good starting point to managing your money wisely.
All household expenses fall under the 3 main categories;
Fixed expenses Variables expenses Savings expenses
Know what your expenses are and try to classify them accordingly.
When cutting cost in your budget, there are those household expenses that you should never ever sacrifice.
For many people these costs are relatively fixed.
1. Healthy & Nutritious Food.
We all know how important it is to eat healthy.
Many people think that affording healthy food might be challenging. They think healthy food is very expensive and may cost them a lot of money.
According to the Atlantic.com, the majority of the household budget is spent on food.
Adding in fresh fruits and vegetables to your diet can be expensive, but if you are eating healthy and well for the sake of your health, you don’t need to compromise that.
Even if the processed food is cheaper, it is not worth risking the health of your family just to save a couple of coins.
Your health is important to you. It keeps you doing the things that you love.
You stay healthy by being active, by eating right. When it comes to your health you don’t have to cut corners, don’t let your household budget limit you.
Eating healthy is not hard and it does not have to cost an arm and a leg. You still need a well-balanced diet.
If you want to trim your food expenses, you may want to cut eating out.
Eating out costs a lot more than you will spend when you cook your meals at home.
When you are out shopping for food, make a list of what you want. This way, you will focus on buying only the specific food that you need for you and your family.
Also, avoid eating trendy foods, they add a lot of expenses and it is not really worth the cost.
You can just stick to the basic but healthy and nutritious Food.
2. Household Health Care Expenditure.
A normal household budget has several items on it.
Compared with other household expenses, your health is very important and that is why HealthCare should be the first expense on your budget.
Budgeting for medical expenses continues to be one of the number one concerns of many household families. It is one of the most complicated things to plan for.
Medical cost can be very expensive, unpredictable as to what they are going to cost and a very difficult budget item to allocate money for.
With always looming risks that are unforeseen, medical events will shrink your wallet; not to mention out of pocket costs that are constantly on the rise.
Did you know that medical costs are the number one cause of bankruptcy?
Health care is also one of the growing expenses as well.
According to US department of labour data, health care costs represent 8% of annual household spending.
According to the JP Morgan report, from 1982 to 2014 health care grew at an average rate of 5% per year. That is faster than every other spending category except for the cost of education.
As we get older, the cost of healthcare becomes more significant. It’s not only going to go up, but our need for health care is going to go up as well.
When it comes to managing your healthcare expenses, you have to first understand your spending history and your medical history.
Everybody is different. So, depending on your personal history and spending history you should be able to have a ballpark amount of how much you should put aside.
3. Saving & Investing.
Getting creative about how you prepare your budget on a squeezed income is crucial to any household family.
But it is also really important to get creative on how you budget your income so that at least you have something left over for saving.
According to KNBS, as at December 2019 the gross savings rate in Kenya is 5.4%. This statistic explains the poor saving culture in Kenya.
For millennials, nearly 6 in 10 have nothing saved at all.
There are a lot of reasons for this; the increasing cost of housing, transportation, and of course increase in food prices.
It is very difficult when you are on a super low income because you feel like the budget is already so tight; like what more can you realistically cut out.
The first thing that you need to do to kick start your saving power is to have a goal in mind.
It is so important to understand what you are saving for.
By this, it means that you should not only have a figure or value of the amount you need to save, but also a date in which you are going to save that money by.
You need to allocate savings in your budget because saved money will protect you in the event of a financial distress.
Saving money allows you to enjoy greater security in your future life.
As you may know there is no job security or job guarantee.
when the time comes, and you find yourself in a situation where you can’t work and you are in a tough spot. where even those dirty jobs are not an option, you are going to need money.
you are going to need a safety net that is going to get you through point B or C. The savings will help you to not fall deeper into economic depression.