With the cost of living rising seemingly every day, it can be hard to make ends meet. Money goes as quickly as it comes in and you seem to be left with nothing by the end of the week. The best way to take control of you finances and get ahead is by creating a household budget.
It may sound simple, but doing a household budget can be daunting and often gets put in the too hard basket. In your head you know where the money goes and you know it’s never quite enough. I’ve seen it and I’ve also seen the surprise on clients faces when we do up a household budget for them. It’s eye-opening how much you didn’t know about your expenses.
We’ll give you some easy tips to get you started with creating your household budget.
Excel is your friend.
You may think you need to open an app with all singing all dancing features that you might think you need. But in all honesty, an Excel spreadsheet is all you need and the best part, it’s free! Label it “Budget” and you’re all set. You can create a monthly, fortnightly or weekly budget to suit your situation and even a tab for each month of the year if your heart desires.
Alternatively, you can access an ASIC spreadsheet from Moneysmart which is already set out for you and all you have to do is enter your amounts.
Be brutal with your estimates.
If in doubt, over estimate because it is much better to have surplus dollars than be in the negative. There’s no point hiding what you spend or being embarrassed by it. In order for this to work, you have to be honest.
Anything you regularly purchase during the course of your week you need to include in your spreadsheet. Even if it is merely in the “other” column. I always allow myself a “buffer” field to take into consideration expenses I may have missed or underestimated.
Work your budget to your pay structure
If you get paid fortnightly, then it might be easier to set your budget up fortnightly. That way you can work to your income and you know how much you have each pay day.
Average your bills
When it comes to bills, it can be hard to budget an exact amount. So, we suggest adding up your bills for a whole year (each one separately e.g. electricity, gas, internet etc.) and then dividing by 12, 26 or 52 (weeks) depending on the structure of your spreadsheet and budget. For example, say you calculated that your electricity bills were $4000 for the year. You will need to set aside $333 per month, $154 per fortnight or $77 per week to cover these. By doing this, you actually ensure you have the money for the bills sitting in your account when they arrive. No putting it on the credit card in the hope you can pay it off down the track.
Get rid of what you don’t need.
It’s easy to get caught up in what we think we need, but this is actually the biggest budget killer. Focus on what you do need each month, taking out the expenses that are really just nice to haves. This is super important if your budget is tight and you are trying to pay off debts or increase your savings. Seeing your expenses in writing really highlights where you can make savings. You can also see how much hubby really is spending on those computer games!
Separate your accounts
Having a couple of separate accounts can help if you are struggling to keep track of how much money you have. This can also work to keep track of any spare money. Having dedicated accounts for bills and insurances, even the mortgage, can help ensure you have the money ready for when the bills arrive. There is nothing worse than stressing about the pending electricity bill and wondering how you are going to pay it! Do the same with your mortgage, have an account where you put your mortgage repayments so you have them ready to go. This is also useful if you get extra money during the year to place in here and pay off your mortgage sooner.
Do you have a budgeting tip you would like to share with us? We’d love to hear what works for you and if you do any of the tips we suggested. If you are struggling with making ends meet, drop us a line as we’d be more than happy to help.