Developing a budget
The first step in getting your finances in order is to work out exactly how much you earn (your income) and how much you spend (your expenditure). That's right, you need a budget.
Your income includes:
- Government support eg pension
- bank interest
- rental income.
Your expenses include everything you need to spend such as:
- loan repayments
- travel expenses
- school fees
- regular bills eg water, electricity, rates
- child care
- medical expenses
- insurance (car, medical, house)
If you subtract your expenditure from your income you will know whether you are overspending or have some excess money to play with.
Are you out in front or falling behind? Developing a budget will help you gain control of your finances? if you stick to it!
When do I need to budget?
Everyone can benefit from a budget. Regardless of how much you earn, you have to live within your means. And if you have financial goals then a budget may help you reach them.
Preparing a budget can be particularly useful if you are:
- spending more than you should on your credit card
- finding it difficult to save
- saving for a deposit for a home or an investment property, or
- saving to invest.
How do I budget?
You can download the AMP budget planner or, if you prefer, print off a copy of the budget planner and record your details manually.
This should give you a clearer picture of your finances.
The next step is to identify areas where you can cut back on expenses and save some money.
Don't be too harsh on yourself and your family. If you set unrealistic savings goals and don't allow for extras, then chances are you won't stick to your budget for too long.