Budgeting and financial planning are the cornerstones of a stable economic life.

Budgeting and financial planning are the cornerstones of a stable economic life. In fact, from my own experience, keeping a household account book significantly reduced my unnecessary expenses and enabled me to save enough for a long-desired overseas trip. In this article, based on my experience, I will explain how to keep a household account book and how to make a financial plan in a way that is easy to understand for beginners.In this article, we will explain how to keep a household account book and how to make a financial plan in a way that is easy to understand, even for beginners.

In my personal experience, I remember when I started keeping a household account book. I used to spend money without a plan, but maintaining a household account book made my expenses clear and helped me reduce unnecessary spending. As a result, I was able to save enough money to buy the car I had been aiming for. In this article, I will explain how to keep a household account book and how to make a financial plan in an easy-to-understand way for beginners, based on my experience.

The main purpose of keeping a household account book is to clearly understand your income and expenses and to grasp the flow of money. To practice this, follow the steps below.

First, the purpose of keeping a household account book is to clarify income and expenses and to understand the flow of money. To practice this, follow the steps below.

Basic Steps for Keeping a Household Account Book:

1. Record Income: Record all monthly income. This includes salary, income from side jobs, earnings from investments, and any other sources of money received.
2. Classify Expenses: Divide expenses into ‘fixed costs’ and ‘variable costs’. Fixed costs are those that are consistent every month, like rent or loan repayments. Variable costs include food and entertainment, which may vary from month to month.
3. Collect Receipts and Statements: Keep all receipts and statements to record expenses.
4. Regular Entry: Make it a habit to fill in the household account book daily or weekly.
5. Analysis: At the end of the month, review your expenses to see if there are any wasteful expenditures and whether there are items you can save on.

Next, by making a financial plan, you can create a roadmap to achieve future goals. Follow these steps.

Basic Steps for Financial Planning:

1. Set Goals: Clearly define short-term, medium-term, and long-term financial goals. For example, short-term might be increasing savings, medium-term might be buying a car, and long-term might be securing funds for retirement.
2. Current Situation Analysis: Understand your current assets and liabilities and calculate your net worth.
3. Create a Budget: Calculate the necessary budget to achieve your goals. This includes controlling expenses and increasing the amount of money that can be saved or invested.
4. Risk Management: Manage risks by taking out insurance or setting up an emergency fund.
5. Check and Adjust Progress: Regularly check if you are on track with your plan and make adjustments as necessary.

A household account book and financial plan are powerful tools to create a stable financial situation, reduce future uncertainties, and turn goals into reality. Mastering these basics will lead your economic life towards a brighter future.