Many people struggle to budget and most of us are always trying to get ahead in some way or another. There are many ‘bumps in the road’ that can affect your budget and your ultimate goals. There are many ways people budget, here are some tips that could help you achieve your goals and make budgeting a little easier that have worked for me.
Recently my husband and I re did our budget, our circumstances have changed a bit over the past few years, we have added 2 more children to our family within 2 years, I stopped working full time and last year bought a business - all of which come at a cost.
So where did we start?
Firstly, we sat down and went through all of our bills. We wrote down everything that currently comes out of our account as a direct debit including any loans, shopping and bills we receive in the mail or pay cash for.
At this point it was in black and white what we were spending, we had to be extremely honest with ourselves and looked for ways we could save money for example – do we NEED a cleaner every week? NO, so we cancelled. Do we NEED a lawn mower man every fortnight? NO, so we cut that back to every 3rd or 4th mow (we aren’t good at edging). Do we NEED that package on Foxtel? No, so we found a better package. Other things we looked at were our insurances and food bills where we shaved off a bit more.
Next thing we did
We then worked out our net income and what we receive each month from any sources. Income comes in from many sources - this could be wages, rental income, centrelink benefits, maintenance/child support etc.
Now we know what comes in each month and what has to go out. Once we knew what was left over after the bills that had to be paid, the not negotiables, we then decided what we would be comfortable to have each fortnight as our ‘spending money.’ This money is taken out as cash once a fortnight and once it’s run out too bad! If we want to buy something big then we save our spending money. It was a bit of an adjustment to begin with but in all honesty it was the best thing we did, there is no more ‘oh whoops’ at the end of the month when we look at the bank statement.
The 'left over' money
After all of this we then had a figure that we could ‘save.’ We have a mortgage so we decided that our savings would be put towards our house to pay it off quicker and save on interest, this will give us more options later down the track.
If you have a credit card, car loan or a personal loan then this would be a great place to start with the extra 'save' money you have as these are usually the highest interest. You could put that savings towards other things to grow wealth such as a deposit for another house, shares or savings for the kids future but paying off debt, especially the personal loans, credit cards and car loans is a good first priority.
Income – Expenses (not negotiable bills etc) – Spending Money = Savings/extra repayments
$4000 - $2000 - $1000 = $1000
Very simple example but that is the general gist of things. Your expenses can not be more than your income and if you want to get ahead you need to be disciplined in what you spend and what you ‘save’.
You just need to start, sit down do the figures and stick to it.
If you need any advice or would like to discuss your plans with me, please give me a call on 0447277321 or email firstname.lastname@example.org
Tara Williams - Your local mortgage broker located in Newman servicing Karratha, Port Hedland, South Hedland, Tom Price, Paraburdoo, Broome, Newman, Kununurra, Derby, Dampier, Pannawonica, Roebourne, Wickham, Cable Beach and Wyndam