Monday, 30 September 2013

How to Make a Budget

So you want to save some money?! I don't claim to be an expert money saver but I have always been good with money and know how to make a dollar stretch.

Before my husband and I were married we talked about what our expectation were in regards to money and the life that we wanted to provide for ourselves and our future children. It was important to both of us that I was able to stay home with our children, so I knew that we would have to be smart with our money if we were to live off one income. I think it is important as a couple to talk about what your expectations are and find a middle ground. Things are just not going to work well if you have differing ideas in regards to money.

Now on to how to actually make a budget.

1.
Find a time when you are rested, and have a bit of peace. I know, hard to find if you have a bunch of kids!

2.
How much money do you bring in each week? work it out. Include your money you get from working sand any government payments you are entitled to. Add it all up. This is your income and the amount of money you have to work with each week. Write this figure down.

3.
Pull out all your bills, power, gas, water, groceries etc. You need to work out how much you pay per month or quarter, which ever time period your bills come in. It is better to over estimate how much your bill will be then to under estimate.  Once you figure this out, break it down in to weekly amounts.

Example

Our water bill comes once a quarter and usually no more than $100. There are 16 weeks in 4 months so I divide $100 by 16 which is $6.25.
This is the amount I need to allocate in my weekly budget for water.
It is better to over estimate how much your bill will be then to under estimate.

Write these amounts down

4.
Now that you have all your bills out of the way you need to allocate a certain amount to savings. This amount should be as generous as you feel you can be. Think of it as a bill that you have to pay to yourself. You will be surprised how quickly it adds up.

Write this figure down

5.
Add up the amounts from numbers 3 and 4. These are your expenses. Subtract your expenses from your income figure you worked out at the start.

6.
The rest of the money left is your "free" money. It is money that can be used for everything else, movies, dinners out, clothes, the little things you buy during the week like extra milk etc.
It's good to know exactly how much you have to spend on these things each week so that you are not spending more than you can afford.
A good way to keep track of this money is to put it into a separate spending account. Some weeks you may not spend all of it, other weeks you might spend more. By having it in a spending account you know exactly how much you have to spend.

Later this week we will look at ways to reduce our expenses and other ways to find a bit of extra cash!






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