Get your family’s finances in order, because inflation is really “in place” – oPeniazoch.sk

It is not just about rising costs associated with rising energy, food and service prices, but also about how to deal with the money you have at your disposal. It is also more sensible to better plan the purchase of more expensive items, such as more expensive electrical appliances, home or car. Ideally, you can tell in advance when you will be shopping and how you will finance it. Home Credit provides basic advice.

The need for great cleaning in family budgets is closely related to the situation in which most Slovaks find themselves. According to a representative survey by STEM / MARK for Home Credit from the end of last year, the financial expectations of many Slovaks in 2022 are rather pessimistic. Eight out of ten anticipate an increase in household running costs, with most expecting an increase of € 40 to € 120 per month. On the other hand, almost 60 percent of respondents do not expect their income to increase that year.

The first step is to make a family budget, whether you simply write it down, in Excel, or using dedicated applications. However, it is not just a list of current revenues and expenditures, it is good to think about these questions within the budget and give them the appropriate answers:

• How many current and savings accounts and loans do you have?
• What are your regular expenses?
• What do you spend the most on, whether it is the costs associated with housing, meals, clothing, education, leisure activities or various services?
• What is your regular income and which ones are guaranteed each month?
• Is there a reserve for emergency expenses?

The most important information is whether you have higher income than expenses. For example, if you want to take out a loan in the future, the difference between your income and expenses should be enough to cover your monthly payment.

Sometimes there are unnecessarily many accounts

Think about whether you have too many current or savings accounts that you don’t need and pay unnecessary fees for them. Sometimes it pays to combine all members of the household under one account. Then review your debit or credit cards and tell them which ones you actually use so you don’t pay for them unless necessary.

Loans can also be combined

Another aspect that is undoubtedly related to the family budget is the control of all loans. How many loans do you have, how long will you have to repay them and how much will you still have to repay? It is worth considering whether you have enough money to cover all loan repayments, or whether it is not worth asking for consolidation, ie merging all loans into one and thus saving on fees, among other things. Sometimes it is also a good time to repay the entire loan early.

“Consolidation is an optimized loan, which does not necessarily have to be used only in case of problems with repayment, but it is a suitable tool that helps the client to have all installments under control. The whole process is significantly simplified for a person, “Consolidated loans can also be combined in the event of a sudden inability to repay during an illness or a sudden loss of employment.” introduces Miroslav Zborovský, ombudsman of Home Credit clients.

You pay as much as you can and where you can save

The expenditure side of the budget is currently changing a lot. Rising prices often mean that even though you were able to save tens or hundreds of euros a month last year, this saving will disappear this year due to inflation. Therefore, you need to focus more on the expenditure side of the budget and look for reserves where you can save. In the case of current family expenses, which include bills for housing, household, energy, transport, telephone or internet, you will probably not find much space for a reserve. On the other hand, you can save on the purchase of clothing, sports equipment or electrical appliances and other extraordinary expenses, which can also be bought second-hand or cheaper alternatives can be found.

Older children can also help families

Even if you have a stable income, it may not grow at the same rate as rising prices for goods and services. However, other members of the household can also start to contribute to the family budget, although children can get involved through various brigades and thus contribute to their pocket money. It will not only help the whole family budget, but it will also benefit their financial literacy.

Extraordinary expenses must always be taken into account

Of course, some expenses cannot be planned. If a washing machine, refrigerator, car or mobile phone breaks down, these are often indispensable things that usually require immediate replacement or a quick purchase. However, the necessary cash is not always available, so it is necessary to take out a loan. “We still advise people to take a loan from a proven provider licensed by the National Bank of Slovakia. Follow a simple rule that the period of use of the object should be longer than the repayment period of borrowed money. The monthly difference between income and expenses should cover the installment. When borrowing, look not only at the interest rate, but above all at the RPMN – which is the annual percentage rate of charge and indicates the total cost of the loan. “ advises Miroslav Zborovský from Home Credit.

Creating a home budget is important at any time, but it is most needed when spending is overwhelming you and you need to find out where the causes are. It is good to know what expenses make up the largest item and where there are some reserves.