Well, we’ve got through the festive season and can now look forward to an exciting 2016. Many people will have made their New Year’s resolutions (and many of them have been broken already!) and for many of us dreading the arrival of the credit Card bill after the Christmas blow-out the main resolution is to keep a tighter rein on finances this year.
But how do you start to put a spending plan together and more importantly keep to it. The first key thing to remember is that the budget is a general target of spending and not a rigid guide to be stuck to without flexibility. After all, there are many things that happen that can’t be planned for, and making allowances for unforeseen events should be part of any New Year goal setting plan.
The second thing that you have to do is be honest with the figures that you are using. It is no good pretending that you earn more than is actually coming into the household or denying the amount of money you are spending on snack foods or takeaways. If you get additional payments or commissions through your work then treat them as a bonus but for the sake of budgeting you are better to work off your basic income figure. Likewise, you need to make allowances for those extra amounts spent during the week rather than just saying that the $250 you spend on the weekly grocery shop is all you spend on food and drink.
So how do you set the budget? Well, in our experience, the best thing to do is to take an average 3 month period (That generally doesn’t include Christmas holidays!) to work out what you are spending currently. Unless you have the memory of a computer, I would suggest that the best way to do this is to look at your everyday bank statements and Credit Card accounts and jot down where your money is spent.
Some of the larger payments such as mortgage, petrol, groceries and insurances are easy to calculate, but there are the additional expenses such as club memberships, holiday and recreation costs and friends and families birthdays that are frequently taking money out of the household account but can often get overlooked in annual expense calculations. Once you have established where the money is going currently it will be a lot easier to determine any areas of spending that can be reduced to increase the surplus that is remaining after all the costs have been met. School costs and those occasional trips to Doctors, hairdressers and chemists are other frequently forgotten expenses.
When putting together your personal or family budget, remember to work it out in whichever time period suits your calculations. Many online budget calculators work payments out on a monthly basis, but if you receive your income and do all your spending weekly, then your budget plan should be no different. Even if you have some payments which are made annually or quarterly (such as rates), calculate them to fit in with the timing for your budget. (i.e. if you are working on a fortnightly budget, you would divide the annual cost of your rates by 26 so that you can calculate the cost relative to the rest of your expenditure).
There are several websites that you can access to put together a budget plan to keep a check on your spending (e.g ohagans.net.nz or sorted.org.nz)and to download tools to help you. If you’ve resolved to be better with your money this year putting a budget plan together is the best first step to success.
