Surely more than once you have had to stretch your salary to to be able to make ends meet with some food in your fridge. Or that you've had to tell your friends that you were sick when in reality you couldn't afford the tickets to that concert they wanted to go to. This it is a reality in all individuals and families and is related to the domestic economy. But what is it really?
If you do not know what home economics is, what its characteristics are, what it encompasses or how to improve it, surely here you will find all the information you need.
What is home economics
The domestic economy, also called family economy, refers to the expenses, income, savings and investments that take place in a known micro-environment, such as families (with one or more members).
In other words, we could say that it is the economic management of the home and family, in such a way that with a budget it is possible to face the different expenses, consumption, savings, investments and whims that may be had.
An example of home economics that everyone understands is, without a doubt, the weekly shopping. A budget is allocated from the income that is earned to buy the food. In such a way that if we go over, we must reduce expenses elsewhere to compensate.
El The objective of the domestic economy is none other than to achieve, based on the income that one has, to meet the needs of each member in terms of food, nutrition, clothing and footwear, health, housing, etc.
This falls not only on the person who earns the money, but also on who manages it (which may be the same person or another). To do this, you have to use tools and manage it in such a way that you can satisfy everyone and not go out of that "budget", something that, at times, can be very difficult.
What characterizes the domestic economy
Now that you know what home economics is, finding out what the main characteristics of it are is not complicated. In this case we are talking about:
- It is focused only on homes and families. This does not mean that if there is no family it does not work; in reality, the household can also be of a single person.
- It is based on managing a budget to be able to divide the income into the different expenses, savings and investments that you have.
- It allows to know what expenses and debts a person or family has and put tools to try to reduce them to improve the economy.
Why is it so important
Home economics is very important, and in fact it is a knowledge that should be taught from a young age. Imagine you have a child who always asks you for things. And you buy them because you want to be a good father or mother. The problem is that, as he grows up, he asks for more expensive things, and when you cannot satisfy that "whim", the children do not understand the reason because you have always given them what they wanted.
On the other hand, if you provide that child with a “payment” and ask him that, with that money, he administers it and he can buy what he wants but without having more money until the following week, you will be helping him to see the importance of spending alone in what is necessary and essential, not in whims, and you will achieve better management.
That is the importance of home economics. It allows you learn to manage the income you have to cover expenses and save. And, if it remains, to be able to give yourself the odd whim or invest it in business. But if you didn't know how to manage it, as soon as you received the money you would end up spending it and getting into debt to the point of not being able to meet your expenses.
In which areas the domestic economy 'operates'
Within the family economy, it is very important to take into account that it is not only in charge of income (the budget you have) and expenses, but that it is in charge of different parts or areas, such as:
- Additional. Very general, since they can come from the mortgage or rental of the house or garage, travel, clothing, insurance, etc.
- Consumption. Focused on those essential expenses: electricity, water, food ...
- Investment. That area that focuses on what the person wants to invest a part of their money, for example in a pension fund.
- Saving. A part of that income that is saved in case unforeseen events arise.
How to improve the domestic economy
Imagine that you have a salary of 1000 euros. And that, when you put income (those 1000 euros) and expenses on the table, you find that, of the latter, you have 1500 euros. That is, you spend more than you earn.
If you have saved, in principle nothing happens and you can remedy it. But, if this is not the case, and it is normal, you are in the red and, if this excessive spending is not stopped, you could end up losing your house, car or even being denounced for non-payment.
Therefore, to know how to improve the domestic economy goes through a financial education They don't give us the one you face, sometimes, the hard way.
How to avoid it? With these tips:
Always make annotations
At the beginning of the month you have to make notes to know what income you have and what expenses you have. It is true that some will be fixed and others will depend on how the month goes, but for that reason you have to know what you have to spend and what you spend.
This way you will try to stick to that budget you have. Nothing more.
Save every month
Even if it is the minimum, but it is important that save a part of that income you have for anything that may arise (an accident, a job to do, buy a car ...).
According to the economic rule, you should always save 20% of your income, leaving 50 for fixed expenses and 30 for those that arise in the month. But if nothing comes out, that money should also go to savings, if not all, at least much of it.
Set savings goals
As we know that it is very difficult to save, especially with prices rising and everything being more expensive with little income rising, setting small savings goals helps to promote this activity.
And is that When you meet a goal, for example to save 1000 euros, it encourages you to return to a higher goal. And when you see a positive balance in your account and that it is getting bigger and bigger, what you want is to keep increasing it.
It does not mean that you should be "clingy" and not enjoy what you have achieved working, but rather have a "head" and maintain adequate savings for the family you have. For what it could happen.
The domestic economy is not difficult, you just have to carry it out in an organized and planned way to avoid problems.