Household Budget
A household Budget is a necessary evil – without a budget you will find yourself living from one pay day to the next and out of control. Planning ahead is the answer. You should be able to identify where your money is going and when. An overall look at yearly expenses should give you the control, the ability to plan ahead and ensure that the money that you are earning is being used the way that you want it to be used.
Creating a household budget takes 3 steps.
1. Identify how you are spending your money now. 2. Evaluate your current spending. 3. Track your spending to make sure it stays within those guidelines.
So now for Step 1 - Identify how you are spending your money now. Gather together your household bills for the past year. Utilising this historical data and knowledge of your current income and anticipated household expenses for the year, insert your income and expenses into either the ‘Household Budget’ from the enclosed CD or the paper copy in the month when the expense / income occurs. In order to ensure that you adequately budget for your utility expenses using last years bills, add on 5% to the total bill to allow for any increases in costs.
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Now that you have completed inserting all your income and expenses into the ‘Household Budget’ it is time for some simple adding up if you are using the paper version. Of course if you using the copy from the CD, the adding up will be done for you automatically! Add up each of the columns for your monthly income and expenses. Add up each of the rows to show how much you spend in a year on each expense category and your income sources. Now deduct your total expenses (B) from your total income (A) for each month to show if your have a surplus of cash each month after expenses or a cash shortage. Now it is time to take your ‘Household Budget’ one stage further and break the figures down to a weekly picture. If you are using the Excel Budget, this will be done for you automatically. If not, please divide your annual totals by 52 for a weekly picture of your finances. After doing this you are ready for Step 2.
Step 2 - Evaluate your current spending
By completing your Household budget, you can see exactly how much money you spend each week on each of the expense categories in addition to how much your household income is on a weekly basis. This information will enable you to better plan and control the spending of your money. LOOK at where your money has been spent. ASK yourself why some areas are high and if they can be reduced. SEEK financial assistance if necessary.
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If your cash flow is a bit dire each month, take out a piece of paper and draw a line down the middle. Label one side ‘wants’ and the other side ‘needs’. Looking at your monthly household and leisure expenses, allocate which expenses fall into the category of needs and which are wants. Now see which of the wants can be cut back on, such as your Pay TV subscription, weekly hairdresser appointments, buying your lunch every day at work or having takeaway 4 times a week. (Also refer to out Top ways to save money)
Step 3 - Track your spending to make sure it stays within those guidelines.
Re-visit the ‘Household Budget’ at least once a year to reassess your spending and every few months to check that your current spending is staying on track.
Don’t drive yourself crazy monitoring ever item of spending.
You can become over zealous when tracking your spending to the point that it can become to stressful and aggravating to family members. Once you determine which area of spending can be reduced, concentrate on those areas and worry less about other aspects of your spending. Congratulations - the budget that you have put into place will help you navigate your way through some potential money minefields and should speed you on your way to financial growth and independence.
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Top ways to save money
Instead of buying your lunch and a drink each day, take a packed lunch from home to work. Based on paying $10.00 a day for your lunch for 48 weeks a year, taking your lunch to work each day could save you $2,400.00 a year! Plan ahead your weekly dinner menu for the family around the sale items in the local supermarket catalogue sales. This will not only ensure that you buy your groceries for the best prices but it may save you from having to visit the supermarket more than once a week. We all know that when you drop into the supermarket for 2 or 3 things that you can easily come out with a few bags of groceries and not much change out of $50.00!
Watch out for cash leakage. If you find yourself returning to the ATM more than once a week because the money you took out 3 days ago has evaporated from your wallet without an apparent explanation, you need to examine where your cash is going on incidentals.
Rather that turning the heater on to full in winter while sitting watching the TV in your T-Shirt, put a jumper on and turn the dial on the heater down to reduce costs.
Check on plans available for your home telephone and mobile costs. Sometimes you can save costs if you have the same provider for both. This also applies for providers of your gas and electricity – you may get a discount if they are provided by the same company.
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Top ways to save money
See where you can cut down on spending on items such as the following:Pay TV – cut down to the basic package Hairdresser – Find a less expensive hairdresser
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Deposit more than the minimum on your monthly Credit Card statements into your credit card if possible, otherwise interest charges and fees will just keep adding up and you will never get out of debt. Even consider reducing savings and trimming every other budget area so you can get your credit card debt eliminated. Pay off your store cards by the due date otherwise your debt will be charged at a much higher interest rate than what you pay on your credit cards and you will be paying off your plasma TV much longer than you ever intended to do. Even if the store card allows you an interest free period of say 24 months, work out how much you need to pay each month to pay of the purchased item by the date that the interest free period expires. Instead of buying takeaway pizza’s or hamburgers make your own at home. It can not only save money but also entertain the kids if they get to make their own individual pizzas.
Be wise about how you spend your money. It may be unwise to pay too much for goods but it can also be unwise to pay too little. When you pay too much you lose a little money. When you pay too little, you sometime lose everything, because the thing you bought was incapable of doing the things you bought it to do.
How many times have you found this happen when you haven’t wanted to save for a higher priced item which is better and settled for a similar but inferior item that was cheaper?
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