24 Aug. 2006

Thrifly Speaking

Tomorrow I have talk briefly at "Live Well" which is a new group aimed at helping people in the community "live well" using what resources, no matter how small, they have. Tomorrow is it's first ever meeting. A lady in our church community has had it on her heart to start something up for some time, and she has got it happening! Apparently there are a few other speakers, including a mystery "Fred the Gardener", it will be interesting to see who has had a name change for the event . Im going to talk breifly about budgeting and thought I'd share a little of my method with you guys as well...

Working out the budget:
Bills Budget:
Gather all your bills & recepts over the last 12 months (or as many as you can if you haven’t kept records that far back) Put them in order and sort them into a pile for company/service providers/liability. Tally each individual group of bills up –
Your list may include any number of these:
Mobile Phone, Home Phone, Internet, Electricity, Gas utility, Water rates, Council Rates, Rent, Car insurance, Home / contents insurance, Car loan, House Loan/mortgage, Personal loan, Credit card, Store Accounts, Hire-purchase, Rentals/leases, Car/vehicle registration, Mortgage insurance, Drivers licence, Health Insurance, Emergency services levy, Ambulance Cover, Car/auto club membership (RAA, etc), Club Memberships, Childcare,
Child sponsorship, Donations, Tithing, Car Maintenance, Home Maintenance.

I’ve made a pretty big list, but it is easy to forget something important.
The next thing is to put aside any of your bills that are not reoccurring, that were only a “one-off”. You can file these away for future reference if you want.
The bills, etc which are ongoing you need to tally up in their individual groups.
Each bill usually covers a timeframe – weekly, fortnightly, 4 weekly, calendar monthly, quarterly, biannually or annually.
The next depends on how often/regular you receive your income.
If you are a weekly earner then you need to find out the weekly amount of which you need to budget for each bill. Fortnightly earners need a fortnightly budget amount, Salary earners need to find out a calendar-monthly budget amount.

I will give an example:
Jill’s has a fortnightly income. She has limited liablilities:
“A” She pays her Car registration and licence annually
“Q” Electricity and gas bills are quarterly
“C” Telstra (telephone), Internet, Home contents insurance, motor insurance bills are calendar-monthly
“M” She pays rent 4-weekly
“F” A personal loan has fortnightly repayments
“X” extras She has car maintenance costs that are irregular, but she needs to budget for.
As she is a fortnightly income earner she needs to work out a fortnightly budget. She has kept a record of all her bills for a year.
There are in a year: 52 weeks, 26 fortnights, 4 quarters, 12 calendar-months
“A” bills are tallied up for the year, and divided by 26 (fortnights)
to get the budgeted amount required.
“Q” bills are added up for the year’s total and divided by 26 to get the budgeted amount.
“C” bills are added up for the year and divided by 26 as well.
“M” bills need to be tallied and divided by 13 to get the fortnightly budget amount.
“F” bills remain the same. (if a F bill is of a varying amount you tally them up and divide by 26 to get average to budget for)
“X” bills need to be budgeted for by tallying up and estimating a realistic budget to cover them in the future – generally by dividing the total by 26 to get the budgeting amount
She then needs to add up the amounts of A, Q, C, M, F and X and put aside that amount from her pay, to cover their payments in the future. This is her Bills Budget (BB)
Then she has to Work out how much she has left for Groceries, petrol, clothing/extras, entertainment/eating-out, savings, pettycash.
The exact amounts for above vary for each individual, but there are some recommendations…

Groceries: Always make a list! Always follow list when shopping. Take a calculator with you and add up the items as u put them in the trolley. Don’t Impulse Buy!! Only take budgeted Grocery allowance with you to the supermarket. You Don’t always have to buy big brand names – Sugar is sugar and weatbix is weatbix! Quite often the cheaper branded or “no-name” items is just as good – experiment with the cheaper brands, you’ll be surprised…
Petrol: Keep those shopper dockets and use them! Work out your average usage and budget for it… If you want to save on petrol – Walk or bus it or ride a bike or scooter!
Entertainment: Don’t forget this one – you need a treat sometimes, even if it is “lets get takeaway for tea on payday” If you don’t budget for this, then you’ll end up “pinching it” from another budgeted area…
Clothing, etc allowance: This one is hard to budget for, but if you do put a little aside for this in an envelope or separate account then you will have some for when the sales are on… If you can - Never Pay Full Price for Clothes or shoes!
Savings: This is necessary! Even if it is only 5 or 10 dollars a week – it feels good to be able to watch it grow! Discipline & self control are required to not dip into this every-time you put in! Stick to your guns tho!
Petty cash: is what’s left over… you don’t have to spend it all if you don’t want to… you could always put it away for something special.
Income – Bills Budget – Groceries – Petrol – Entertainment – Clothing allowance – Savings = Petty cash

To make it even easier:
Set up a bank account for each budget category, and organise for your pay to be distributed accordingly into each. It also helps to set up a Christmas account.
Get a grip on account keeping fees – shop around for your financial institution, use your accounts economically – be aware of how many free transactions, etc. Over the counter transactions cost a mint! Use eftpos, your banks ATM, get a visa-debit (not credit) card, use internet banking.
Utility / Service providers that offer Bpay let you prepay money off your upcoming accounts/bills as often as you want. You can set it up via your netbanking or ask your bank teller to help you set it up.
Other TIPs:
CUT UP THE CREDIT CARDS! Pay the Credit account off as soon as you can – don’t just pay the minimum or just the interest… your throwing money down the drain.
If you haven’t the money for it and you didn’t budget for it DON’T BUY IT! Avoid hire-purchases at all costs! Interest free deals – make sure you read the fine print or don’t sign it!
If you really don’t need it don’t buy it!

Happy Budgeting

If you have a really good budget method that works for you, why dont you share it... blog it... post it... pass on the blessings

1 comment:

  1. wow thanks for the great TIPS. many of them id o already i just needed a good reminder!