Last month I spoke about the advantages of having a budget and how I’ve noticed that so many people these days don’t have one.  This month, I thought I would share the questions I ask myself when I look at my budget and also some that I ask my clients when they need help getting their expenses down on paper …

We need to make a list of every commitment starting from the number one priority i.e. your mortgage or rent.  Next priority is paying off any debts such as a vehicle loan or credit cards, then utilities, insurances, vehicle expenses, and any (what you would consider) non-negotiable items. Things such as children’s swimming lessons, income protection, gym membership etc.  After that we need to consider groceries and of course entertainment. There is no point in being alive if all we are doing is working to pay debts. Allow a reasonable amount of money for a sensible amount of luxury spending, such as dinner, movies or a weekend away.  Lastly and I believe most importantly, at least 20% of your income should go to a separate savings account. This account should only be used for emergency situations, big ticket items such as a new fridge and\or family holidays.

There are other things to consider when creating a budget also.  If you can afford it, Income Protection is a very important insurance overlooked by the masses in Australia.  If you think budgeting week to week is difficult on your current income, imagine if that income ceased.

There are many positives to having a budget.  It forces you to examine where you’re spending your money, and more importantly question what is important and what is frivolous spending.  This alone can help you curb your ways and start saving money.  It’s amazing how prudent you become when you limit your grocery spending.  Here are some other ideas to help you save the dollars:

• Grocery shopping on line – limits impulse purchases OR write a shopping list and stick to it. Buy staples in bulk.
• Consider Insurance & Utility comparing companies for better rates.
• Are you over insured? Health insurance often covers you for things you may not need.  If you’re young, hip replacement surgery shouldn’t be on your list. If you’re older, maternity options are not needed.
• Negotiate rates with your credit card supplier – consider closing the account so you cannot use any available balance and just focus on paying it off.
• Limit take-out and restaurant visits. If you’re after a quick meal, consider easy and fast recipes or cook some extra sauces and freeze for pasta on a late night home.
• Turn lights off.
• Buy quality products that will last. Often it is a better investment to spend a little bit extra and have the product last much longer. This applies to anything from clothing to white goods.
• Wash the car at home.
• Buy used when you can. I love to visit our local Sacred Heart Mission store.  It’s full of fantastic, cheap finds!  The kids love it too.
• Leave the car at home. Walk or cycle more.
• Gym membership. Do you go often enough to consider the monthly charges reasonable or should you just pay as you go?
• Bring your lunch to work – this could save you up to $60 a week!
• And my favourites, ALWAYS ask for fees to be waived or if you’re buying more than one of the same product, ask for a discount.

Remember, money isn’t everything and I don’t believe we should be so frugal and thrifty that we miss out on the fun things in life but we all know life is much easier when you’re debt free.  Being debt free starts with a good, achievable and manageable budget.  Start one today, focus on reducing your debt and before you know it, you’re on your way to that beach holiday without any use of credit.  Bella Vita!