Budgeting

There are many ways to budget and each person's budget is unique to their particular needs and wants. Without being too simplistic, your expenses (including paying debts such as credit cards) must be less than your income. Sometimes this is easier said than done.

A budget is a living document that needs regular review and can change from year to year or even week to week.

What negatively impacts a budget?

• Increase in fixed expenses (e.g. rates notice increase, rental increase).
• Increase in variable expenses (e.g. food and petrol).
• Increase in minimum debt repayments (e.g. interest rate rise, end of interest free terms).
• Decrease in income (e.g. reduction in overtime, job loss, changes in Centrelink/Family Assistance rates).

A budget can be very tricky to predict, particularly in these changing and volatile times. The “structure” of the budget is one of the most important things to understand.

Typically, income goes towards one of three areas; bills, savings, day-to-day expenses.

Steps to assist you to manage your bills

• Collect all your regular bills and these include electricity, gas, phone, insurances, registration, and rates.
• Work out your required budget for the period (monthly, fortnightly, annually).
• Allocate this amount plus additional funds (e.g. $30 per fortnight) to cover rising costs.

Tips and ideas to help you save.

• Try and save a regular amount every pay period. Even $20 per fortnight will give you a sense of control and progress. Try to think of saving as an expense, as something you “have to” do.
• Try not to use this account as a ready means of cash. It defeats the purpose of saving.
• This account may be specifically designated for Christmas presents or holidays. Use it for a “reward” for the saving.
• Small amounts are fine. Regular savings every pay period is highly recommended.

Tips for managing your day-to-day expenses

This is the “discretionary” account for the pay period. If you are paid weekly, budget weekly. If you are paid fortnightly, budget fortnightly. If you are paid one amount in week one, and then a different amount in week two, set the budget fortnightly but allocate to meet those particular amounts.
 
Discretionary spending includes:

• food
• petrol
• take-away
• clothing
• school excursions
• entertainment

The main idea with this account is to ensure that you stay within the limits of the amount budgeted. For example, if you have allocated $200 for the week and you spend $196, that’s fine, you have stayed within budget. If you allocated $200 for the week, and spent $204, then you’ve gone over budget and will need to reconsider some of your spending.

Remember your bills have been met from placing $ (X) in the bills account. You have savings. You can spend the full amount from the living account.

Further assistance with income management

If you find that you cannot manage food plus petrol and other items allocated in the living budget, then it’s time to seek the support of a financial counsellor. Lifeline offers free financial counselling in a number of areas. There are also other organisations that offer financial counselling services. We recommend that you should never pay for financial counselling, as this may put you into further hardship.

There are many great websites that can help you with your budget. The financial counselling association recommends that you don't pay for one, as there are plenty of good free ones to access.

Some sites you might like to try are:
• Managing your money (Child Support Agency)
• Your Money (FIDO)
• Budgeting (Fair trading)

Energy Conservation

Financial sustainability is closely linked to environmental sustainability and acting more responsibly with your household consumption (including cleaning products, electricity/gas). Environmental sustainability at home will result in significant savings in your weekly budget. The Keep Australia Beautiful National Association has some useful information about environmental sustainability (kab.org.au).

By having an energy efficient appliance you can save money and reduce greenhouse emissions. The following links can help you to achieve this.

• energy ratings
• energy wise calculator 
• green power