Make the Most of Your Family's Budget

1. Plan

Do you know the 5 financial P’s? Perfect Planning Prevents Poor Performance. It’s true! Without a plan in place, your hard earned money can appear to slip through your fingers. It is important to know how much you earn, how much you spend and what you do with whatever is left.

2. Financial Position

The first step is to look at your financial position. List all your income (actual salary payments, regular Centrelink, child support payments, rental income plus any other regular funds) coming into your household. Now comes the fun bit…you need to be realistic and honest or this won’t work…you need to list all the things you spend your money on. Go through your bank statements, direct debits, receipts and write down 1 years worth of actual figures (don’t worry about the “I won’t spend that much in the future”)…we’ll get to that.

You need to list all utilities, mortgage / rent, phone, internet, food, luxury items, credit cards, school fees, the lot. Some things will be pay as you go, some will be monthly direct debits and some may be annual payments such as car registration. The advantage of doing this honestly is that you can see where your money goes. But be prepared to be shocked by what you actually spend. It’s rarely what you expect.

3. Debts

Credit card debt is the worst kind of debt you can have; high interest rates and a feeling of helplessness when you don’t see your debt reducing. Depending on the amount you owe, you could be just paying off the interest.

Speak to your bank manager about ways to minimise your debt. Consolidate it, consider a personal loan with lower interest rates or incorporate it into your home loan to pay less interest. Be tough with yourself and throw any spare cash at the debt, otherwise it will spiral out of control. NEVER do a cash advance on a card unless it is an absolute emergency (not a gorgeous pair of boots).

4. Budget

Now that you have had an honest look at where your money is going, how does it make you feel? Any surprises? Strip out the things you don’t actually need. Review your insurance policies / internet provider account details to ensure you are only paying for what you need. Review your mortgage – try to get the best rate and lowest fees. Take a look at your bank accounts; only hold active accounts you need. Give yourself a new budget with a limit on what you can spend – some things you can control, some you can’t, but don’t exceed it. If it is too tight to start with – amend your budget – don’t put too much pressure on yourself – this is a working budget and needs to be realistic.

Now that you have stripped out the things you don’t need, set up a separate bank account into which you can put spare money. Have it automatically transferred from your salary account on a pay day and don’t touch it! Aside from fun goals, some savings will come in handy, as you never know when you will need a new fridge or car repairs.

5. Goals

Set some goals. What do you want? Is it to pay off a certain amount from your mortgage? To go on a holiday? To purchase property? To have enough saved to give you peace of mind? Your goals need to be SMART:

S – Specific

M – Manageable

A – Achievable

R – Realistic

T – Timely

Planning, monitoring and achieving your goal is just as rewarding as the goal experience itself. It is possible for everyone to achieve their goals. Just think about what you want and put a plan in place to achieve it. Ask for help if you need help setting up your goals. Bank managers are friendly than they seem.

This article was submitted by Joanne, a highly awarded bank manager and single mum who successfully combines full time work with raising two boys.