A family budget: why it’s a good idea A family budget is essential to managing your money. That’s because a family budget helps you:

• spend your money wisely on the things you must have – these are your needs
• save money for the things you like but can live without – these are your wants
• set aside money for unforeseen expenses – for example, if your car/motorcycle breaks down and needs repairs
• stop accidental overspending.

Working out how much money you need for everyday essentials like food, housing, utilities like gas, electricity, phone and water, transport and medical services can help you make sure you have enough for unexpected expenses and emergencies.

Getting started with budgeting

The key to budgeting is sticking to a basic rule – spend less than you earn.

One way to start budgeting is to list what you earn, spend money on and owe. It can help to look at past income.

Try to look at enough bills and statements from the past year to understand your usual earning and spending habits. It’s good to look at how some bills are higher at different times of the year. For example, energy bills are often higher during the dry season because of the cool.

After you’ve accounted for essentials and emergencies, your aim is to have money left over to spend on things you want.

Working out what you spend: the first step towards managing money

One of the hardest things about making a budget and managing money can be keeping track of what you spend. Spending can be regular (fixed expenses) or irregular or once-off (variable expenses). Here are some of the fixed expenses you might want to include in your family’s budget:

• mortgage repayments or rent
• utilities – gas, electricity, water, phone and internet
• council fees and land taxes
• school or tertiary study fees
• health, car and household insurance
• public transport costs
• credit card and personal loan repayments.

Here are some of the variable expenses you might want to include in your family’s budget:

• food
• home maintenance and household goods
• school uniforms, textbooks and stationery
• medical and dental fees
• car repairs and petrol
• personal items like clothing and haircuts
• registration fees and equipment – for example, for sports, music or dance programs
• holidays entertainment gifts – for example, for birthdays or weddings
• other things like special treats for you and your family.

If your income allows, deliberately overestimating the money you need for bills might help you find extra spending money.

Planning how and what to save: a key part of managing money

Your budget will tell you whether you’re currently spending more or less than you earn. If you’re currently spending more, it can help to sit down together as a family and think about where you can save money. And if you’re already spending less than you earn, you can look at how to save and how to use your savings. Here are some tips for making a savings plan:

• Review your spending. Figure out whether you’re saving as much as you can. Could you spend less on certain items? Do you have any high-interest credit cards or other loans? Could you pay these off as soon as possible and look into more suitable credit or loan options? It’s a good idea to do this regularly.
• Build a savings buffer. Before you start saving for your wants, it’s really important to keep extra savings for financial emergencies. For example, you could aim to keep some money in a separate saving account for emergencies.
• Decide what you’re saving for. What are your goals? How much do you need to save to achieve them?
• Set a deadline for your goal. Give yourself plenty of time – saving can seem to take forever. But be realistic, and you’ll avoid feeling the pressure.
• Open a fee-free bank account, which is separate from your main account. You can use this account only for saving towards your goal. You can set up a direct debit from your main account to regularly transfer a set savings amount.

Once you’ve come up with a savings plan, it’s a good idea to review the pros and cons before you start. This way you’ll know how it’ll affect your family life. If there are parts of your plan, you’re unsure about, seek advice or double-check your calculations before you go ahead.

Credit to: raisingchildren.net.au