1. KEEP A DAILY DIARY
The most a
ccurate approach is to note down every cent you spend on a daily basis over a three month period. You could simply record your expenses by hand, using a separate page for each week or you could use a spreadsheet. If you can, divide your expenses into the major categories, as this could help you identify areas where you can cut back. If you use this approach, also think about including your annual expenses, for example your insurance premiums. The advantage of this approach is that it allows you to see exactly how much you are spending. If you have never done this before you will probably be astonished by how much you actually spend, and what you actually spend your money on.
The most a
ccurate approach is to note down every cent you spend on a daily basis over a three month period. You could simply record your expenses by hand, using a separate page for each week or you could use a spreadsheet. If you can, divide your expenses into the major categories, as this could help you identify areas where you can cut back. If you use this approach, also think about including your annual expenses, for example your insurance premiums. The advantage of this approach is that it allows you to see exactly how much you are spending. If you have never done this before you will probably be astonished by how much you actually spend, and what you actually spend your money on. 2. REFER TO YOUR RECORDS
You could also use your bank records, such as credit card and bank statements, to draw the information from. If you use your credit card to pay for most things and have direct debits set up from your bank account for your regular expenses, this approach can be an effective way to gather information on your expenses. Your credit card in particular will itemise your expenses, such as groceries, restaurants, clothing purchases, etc. The advantage of this approach is that it allows you to begin your budget now without having to collect information over the next few months.
Alternatively, you could use bills, such as utility bills or school charges, to calculate expenses. If you use this approach it is important that you make sure you collect all the information to include in your budget.
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GATHERING INFORMATION ON EXPENSES
Whate
ver method you use to gather information on expenses for your budget, remember to make sure that you take account of small and large expenses as well as expenses that may be daily, weekly, quarterly or annual. The more information you collect, the less likely you are of being surprised by an unexpected expense.
Whate
ver method you use to gather information on expenses for your budget, remember to make sure that you take account of small and large expenses as well as expenses that may be daily, weekly, quarterly or annual. The more information you collect, the less likely you are of being surprised by an unexpected expense. GETTING THE TIMING RIGHT
It’s a good idea to match your budget to your pay period; which may be weekly, fortnightly or monthly. That way you can use your budget to help you manage every income payment effectively.
CONVERTING YOUR NUMBERS
Not all of your income and expenses will be for the same timeframe, so you’ll need to convert some of them to make sure your budget figures are accurate. If you pay a certain bill by the month, but your budget is for a fortnight, you might find it easy enough to work out what the fortnightly cost of this bill would be. But some of the conversions might be a bit tricky to do in your head – the conversion guide below will help you to make your budget accurate.
MAKE MY WEEKLY AMOUNTS FORTNIGHTLY: Multiply your weekly amounts by two – the result is the fortnightly amount.
MAKE MY MONTHLY AMOUNTS FORTNIGHTLY: Multiply your monthly amounts by 12. Divide the answer by 26 – the result is the fortnightly amount.
MA
KE MY YEARLY AMOUNTS FORTNIGHTLY: Divide your yearly amounts by 26.MAKE MY WEEKLY AMOUNTS MONTHLY: Multiply your weekly amounts by 52. Divide the answer by 12 – the result is the monthly amount.
MAKE MY FORTNIGHTLY AMOUNTS MONTHLY: Multiply your fortnightly amounts by 26. Divide the answer by 12 – the result is the monthly amount.
MAKE MY YEARLY AMOUNTS MONTHLY: Divide your yearly amounts by 12.
KEEPING A RECORD
The next step is to complete a budget planner. You can fill in the one below, create your own or use one of the many made available by banks and other financial institutions. You can find these ready-made planners online or ask for a printed version from your bank.
REGULAR INCOME
Use this table to write down your regular income.
REGULAR EXPENSES
Use the
table on the next page to write down your expenses. It’s also got room to include any savings you set aside, and any regular debt payments. Start by filling in your fixed expenses – they are the ones that don’t change from period to period, such as your rent or loan repayments. Your variable expenses are trickier as they will go up and down. You will need to work out the amount for each period. We’ve left some blank spaces at the end of each category in case you need to add any other expenses. TIP:
KEEP YOUR BUDGET ACCURATE
Use after-tax income figures (this may require you to make an adjustment if deductions have not been taken into account), e.g. imputation credits for dividends paid on shares Do not include irregular income that may not be reliable, e.g. annual performance bonus, gifts of money Calculate using consistent expense periods, e.g. weekly, fortnightly, monthly.