Organising your budget

Let’s get going with organising a budget.

It is helpful to look at the money coming in (income) and going out (expenses) across a whole year.

List all your income. This could be wages from full time, part time, or casual work, pension, government benefits, child support payments and money from investments. If your income regularly changes, make an estimate based on your past 3 months of wages.

Work out what your living expenses will be every fortnight. To do this, look at your bank statements, regular bills and receipts. Also investigate rental, power and content insurance amounts. Add up your regular expenses for items like rent, food, phone, internet, electricity, transport, insurance and medical expenses. You may need to use your best guess for irregular expenses like clothing and haircuts. Finally, budget a regular amount for savings.

For expenses that must be paid every month, quarterly, and annually, multiply the highest amount you expect to pay for the bill by the number of times you will receive a bill in a twelve month period, then divide this number by 26. For example, if your power bill is $350 and will come every 3 months, this is 4 times in a year. $350 multiplied by 4 equals $1400, then divided by 26 equals approximately $54 per fortnight.  This will give you the amount to put in your fortnightly budget for these items.

If you have any money left over from one fortnight save it. Budgeting to make savings is important. You wish to save for unexpected expenses or a holiday, for example.

Ask for as much support and advice as you can to make sure that you have budgeted enough to pay for your expenses.

Now you have all of your income and expense amounts, subtract your total expenses from your total income. If you have more expenses than income you need to act quickly to change this. Check your budget to make sure you have got all the amounts right and look at your expenses to see if there are any you could reduce. What could you cut out or cut back?

If you have more income than expenses you are set to go with your budget.

Print your completed budget plan and keep it somewhere safe. Remember to use it. Before you go to the movies or the supermarket, check your budget to see how much you can spend and then stick to that amount.

If you are on a low income or have never budgeted your money before, starting a budget may be tough. It does get easier though because you will get better at it the more you do it.

There are also people who can help you for free with budgeting such as financial counsellors.

Budget and monitoring services

Beware of budget plans sold by people who claim that they can help you pay off your loans faster. This kind of service could be costly and often these budgets are impossible to stick to.

People use money two ways:

1. They buy things they need or want now.
2. They save for things they may need or want later.

It’s not about how much money you have, but how you use your money.  It is all about the choices you make.

The Difference Between needs and wants

Here’s a good rule about money:  It is very important to make your needs come first. That’s why it is important to know the difference between your needs and your wants.

Before you start planning how to use your money, let’s be clear about the difference between needs and wants. A need is something you must have to survive, like a place to live or enough food to eat. A want is something you might like to have but don’t need as an essential item right away. You can save for something you want and have it later.

If you are on a low income and really must get a loan for something you need, you may want to consider contacting the No Interest Loans Scheme (N.I.L.S.). This scheme offers interest free loans to Tasmanians on a low income, for the purchase of essentials including household, education, medical, dental, or car expenses.

Remember, to take out a loan (a debt) you must be able to show that you have enough income to pay it back. If you are on a low income, make sure that you only take out a loan as a very last resort.