Household budget planner

Household Budget Planner

Use this skill to build a practical Israeli monthly budget for a household, freelancer, consumer, or small business owner. Track income, expenses, transfers, VAT-aware business costs, sinking funds, and savings goals in ₪. Use DD-MM-YYYY dates and keep business cash separate from household cash.

Do not treat the output as tax, legal, investment, pension, mortgage, or insurance advice. Verify current rates and rules with official Israeli sources or a qualified professional before filing, signing, investing, borrowing, pricing, or cancelling coverage.

When to use

Situation	Use this workflow	Main output
Household asks “where did the money go?”	Spending audit	Category totals, recurring charges, leakage list
Family wants a monthly plan	Monthly household budget	Income, expense, surplus, savings rate, action list
Freelancer mixes business and household money	Freelancer cash-flow split	VAT reserve, tax reserve reminder, owner draw
Consumer has card installments	Liability review	Monthly cash impact and remaining obligation note
Household wants to save for a goal	Savings goal workflow	Gap, months remaining, monthly contribution
Small business needs a basic cash view	Business/household separation	Business expenses, household transfer, reserve warnings

Israeli categories

Use these categories unless the user supplies a better structure.

Category	Examples	Planning note
housing	rent, mortgage, Va'ad Bayit, repairs	Separate repairs from recurring housing
arnona	municipal property tax	Bi-monthly bills usually need division by 2
utilities	electricity, water, gas	Expect summer/winter seasonality
food	groceries, delivery, restaurants	Split groceries from delivery when food is high
transport	Rav-Kav, fuel, parking, tolls, insurance	Separate commuting from leisure trips when useful
healthcare	Kupat Cholim, supplemental insurance, medication	Include family premiums and recurring prescriptions
insurance	car, home, life, disability	Avoid double-counting health insurance
communications	mobile, internet, TV, streaming	Detect duplicate subscriptions
education_childcare	gan, after-school care, school fees, tutoring	Watch September and holiday spikes
debt	loans, overdraft, installments	Track monthly payment and remaining liability
tax_reserve	VAT, income tax, Bituach Leumi reserve	Reserve before household spending
business	software, accountant, equipment, professional travel	Tag separately from household spending
savings	emergency fund, annual sinking funds, goals	Treat as planned allocation
leisure	gifts, culture, hobbies, vacations	Keep realistic; zero leisure often fails
other	unclear spending	Keep below 5% of expenses

Data to collect

1. Budget month in MM-YYYY.
2. Net salary, benefits, refunds, and business collections.
3. Fixed obligations: rent or mortgage, arnona, utilities, loans, insurance, subscriptions.
4. Variable expenses: food, transport, healthcare, childcare, leisure, household supplies.
5. Irregular expenses: annual car insurance, test/licensing, school supplies, holidays, professional dues.
6. Savings goals: name, target, current balance, due date.
7. Freelancer fields: VAT status, accountant-provided reserve rates if known, business expenses, owner draw.
8. Shared-household fields: payer, split percentage, reimbursements, joint vs personal expenses.

Decision tree

flowchart TD
    A[Start with budget request] --> B{Household only?}
    B -->|Yes| C[Monthly household workflow]
    B -->|No| D{Business or freelance income?}
    D -->|Yes| E[Freelancer or small-business workflow]
    D -->|No| F{Goal focused?}
    F -->|Yes| G[Savings-goal workflow]
    F -->|No| H[Spending-audit workflow]
    C --> I[Normalize ₪ amounts and DD-MM-YYYY dates]
    E --> I
    G --> I
    H --> I
    I --> J{Complete enough to calculate?}
    J -->|Yes| K[Summarize, flag risks, recommend actions]
    J -->|No| L[Mark assumptions and request missing values]

Monthly household workflow

1. Set month and currency.
2. Record all income first.
3. Record fixed expenses.
4. Record variable expenses.
5. Normalize non-monthly bills:
   • Arnona paid every two months: divide by 2.
   • Annual insurance: divide by 12 or by months until due.
   • School-year costs: divide over active months or average over 12 months.
6. Add savings goals and sinking funds.
7. Compare actual spending to category limits.
8. Return no more than five concrete actions.

Example

{
  "month": "05-2026",
  "income": [
    {"date": "01-05-2026", "amount": 15000, "kind": "income", "category": "salary"},
    {"date": "10-05-2026", "amount": 3200, "kind": "income", "category": "freelance"}
  ],
  "expenses": [
    {"date": "02-05-2026", "amount": 6200, "kind": "expense", "category": "housing"},
    {"date": "05-05-2026", "amount": 920, "kind": "expense", "category": "arnona", "normalize_months": 2},
    {"date": "08-05-2026", "amount": 3900, "kind": "expense", "category": "food"},
    {"date": "15-05-2026", "amount": 860, "kind": "expense", "category": "transport"}
  ],
  "savings_goals": [
    {"name": "Emergency fund", "target_amount": 30000, "current_amount": 18000, "due_date": "31-12-2026"}
  ]
}

Expected summary pattern:

Income: ₪18,200
Expenses: ₪11,420
Net cash flow: ₪6,780
Savings rate: 37.3%
Emergency fund gap: ₪12,000
Required monthly contribution: about ₪1,500
Actions:
1. Cap food and delivery at ₪3,300 next month.
2. Schedule ₪1,500 automatic transfer after salary.
3. Review parking/fuel if transport remains above ₪850.

Freelancer and small-business workflow

1. Record gross collected revenue by cash receipt date.
2. Identify VAT status:
   • Osek patur: no VAT collection on ordinary invoices, subject to current official threshold and rules. The 2026 Tax Authority threshold verified in the web pass is ₪122,833; verify annually.
   • Osek murshe or company: VAT may be collected and remitted under reporting rules.
3. If VAT is included, extract VAT and place it in a reserve bucket.
4. Add accountant-provided income-tax and Bituach Leumi reserve rates when available.
5. Mark expenses as household, business, mixed, or unclear.
6. Set a stable owner draw to the household budget.
7. Keep a business buffer before increasing household spending.

VAT extraction:

VAT component = gross × VAT rate / (1 + VAT rate)
Net before VAT = gross / (1 + VAT rate)

Example:

VAT-inclusive receipt: ₪11,800
VAT rate: 18% (verified as current in the 04-06-2026 web validation pass for examples from 01-01-2025 onward)
Net before VAT: ₪10,000
VAT component: ₪1,800
Spendable household income: not the gross receipt; use owner draw after reserves

Savings goal workflow

1. Confirm target, current amount, and due date.
2. Calculate gap = target - current.
3. Calculate months remaining.
4. Calculate required monthly contribution.
5. Compare required contribution to monthly surplus.
6. If infeasible, extend date, reduce target, or reduce named categories.

flowchart TD
    A[Savings goal] --> B[Calculate gap]
    B --> C[Calculate months remaining]
    C --> D[Required monthly contribution]
    D --> E{Contribution <= monthly surplus?}
    E -->|Yes| F[Automate transfer]
    E -->|No| G[Choose one lever]
    G --> H[Extend due date]
    G --> I[Reduce target]
    G --> J[Cut specific category]

Spending audit workflow

1. Import bank or credit-card CSV.
2. Convert to normalized fields: date, amount, kind, category, description, vendor.
3. Remove internal transfers.
4. Deduplicate by date, amount, vendor, and description.
5. Treat refunds as negative expenses or refund-tagged entries.
6. Mark cash withdrawals as temporary until receipts exist.
7. Detect recurring charges by vendor and similar amount.
8. Report top merchants and top categories.
9. Split quick wins from structural changes.

Edge cases

Edge case	Handling
Bi-monthly arnona	Divide by 2 for planning and keep original bill note
Annual insurance	Create monthly sinking fund and track cash month separately
Credit-card installments	Count monthly installment in cash flow and track remaining liability
Refunds	Do not inflate income; tag as refund or negative expense
Foreign-currency purchase	Use actual card settlement in ₪
Shared household	Track payer, split percent, and reimbursement as transfer
Mixed business/household expense	Use business-use percent only with a stated basis
Cash withdrawals	Keep temporary category until receipts exist
Overdraft interest	Treat as urgent debt cost
Holidays and school year	Create Passover, High Holidays, vacation, and September sinking funds
VAT rate change	Pass VAT rate as a parameter; do not hard-code decisions

Anti-patterns

• Treating gross freelance revenue as household income.
• Spending VAT collected from customers.
• Averaging annual expenses without checking payment month.
• Hiding installments under purchase date only.
• Combining groceries, delivery, and restaurants when diagnosing overspending.
• Classifying refunds as normal income.
• Leaving more than 5% of expenses in “other”.
• Recommending insurance cancellation without professional review.
• Presenting reserve estimates as official tax advice.
• Assuming municipal, utility, benefit, or tax amounts are identical across households.
• Mixing business and household expenses without tags.
• Using stale rates without verification.

Troubleshooting quick table

Symptom	Likely cause	Fix
Paper surplus but falling bank balance	Missing annual bills, installments, transfers	Add cash calendar and liability list
Food is too high	Delivery/restaurants mixed with groceries	Split categories and cap delivery first
Freelancer cannot pay VAT	VAT treated as income	Reserve VAT immediately
Goal never progresses	No automatic transfer	Schedule transfer after income receipt
Totals do not match statement	Duplicates, refunds, card timing	Reconcile by date, amount, vendor
Expenses look too low	Cash spending missing	Add cash withdrawals as temporary
Plan feels impossible	No leisure or holidays	Add realistic discretionary and sinking funds

Production checklist

• Confirm all amounts are in ₪.
• Confirm dates use DD-MM-YYYY.
• Verify VAT, osek patur threshold, Bituach Leumi, income-tax, labor, municipal, utility, rate, and benefit rules through official sources.
• Separate household, business, mixed, and reserve entries.
• Reconcile imports against bank/card totals.
• Remove duplicates and transfers.
• Avoid storing identity numbers, full card numbers, account numbers, passwords, or tokens.
• Review unclear transactions manually.
• Document assumptions.
• Use accountant or tax adviser for filings, VAT, payroll, deductible expenses, and entity decisions.
• Use licensed advice for investment, pension, mortgage, and insurance decisions.
• Re-run after major income, rent, rate, family-size, or business-status changes.

Response template

Budget month: MM-YYYY
Currency: ₪

Income:
- Salary: ₪...
- Business revenue: ₪...
- Other: ₪...

Expenses:
- Housing: ₪...
- Arnona/utilities: ₪...
- Food: ₪...
- Transport: ₪...
- Healthcare/insurance: ₪...
- Taxes/reserves: ₪...
- Other: ₪...

Net cash flow: ₪...
Savings rate: ...%

Risks:
1. ...
2. ...

Recommended actions:
1. ...
2. ...
3. ...

Assumptions to verify:
- ...