Online Calculator | Saving Money with a Household Budget

Saving Money with a Household Budget

If you want to reduce your financial stress and overall net worth then it pays to figure out your finances with a household budget. The basic idea for a monthly budget is to calculate how much money you have in comings versus what is being spent and how you are spending it. Now you are armed with all the information it’s time to make some changes to achieve your goals.

Follow these simple step by step instructions to creating a budget for your household.

1: Calculate Your Incomings: This should be fairly easy. You need to calculate your typical incomings per month such as pay checks (after tax), bonuses and dividends from any investments. If there are some payments you only get once or twice a year such as bonuses then average that figure out over a year to give you a typical month.

2: Calculate Your Outgoings: Calculating your outgoings is a little bit more complicated as you spend money in far more ways than you earn it. Print off statements for the past couple of months for all your bank and credit card accounts and run through them to classify where your money is being spent and how much is going out each month. Transactions made using credit cards or debit cards may be easier to keep tabs on but it’s hard to see where cash withdrawn from ATM’s has ended up. A simple method to keep tabs your cash spending is using creating a spending diary in a notepad and jotting down everything you spend money on each day such as coffee and magzines and anything else you spend. Hopefully you will find your typical outgoings are lower than your incomings but often this is not the case. You may be surprised to find your outgoings are higher than you incomings which means you will be pushing yourself further into debt each month which is not sustainable.

3. Classify Your Outgoings: Once you have worked out all your outgoings it makes sense to classify them together into categories such as groceries, utilities, clothes, entertainment, loan repayments, travel and so on. Doing this will let you see where most of your money is going.

4: Sort out the essentials, the nice to haves and the not required: Now you can see where your money is going then you need to decide what can be changed. You may find some of the expenses are fixed and cannot easily be changed such as rent or mortgage repayments, car registration and so on. If you need to make large cutbacks then perhaps even these items could be reduced by downsizing your home. If you don’t want or need to go to such lengths as moving home then you need to seek other areas for cutbacks. You can reduce your monthly bills in lots of ways such as becoming more energy efficient around the home, switching utility companies, using VOIP for calls via broadband or cutting out pay-TV packages. Common areas for cutbacks are reducing your entertainment and shopping expenses for items such as dining out, buying music, clothes and so on.

5: Make Goals: You should now have figured out what you are spending and where you can make cut backs. You need to make sure your monthly budget not only gets you through the month but also puts you in a better financial situation each month. A couple of methods of raising your net worth is by lowering your debts or by increasing your savings. If you currently have personal debts such as personal loans or credit cards then your goal should be to cut this debt as soon as you can. Aim to pay off as much as you can each month and set a minimum goal which should form part of your budget rather than being an afterthought. Once you have paid off debts then the focus can become on saving money each month via a high rate online savings account. You will find that when you make regular payments the interest will start to accumulate with high interest savings account products. You should make it a goal to increase your net worth each month by either reducing your debts or boost your savings so you have money saved for unexpected expenses or to purchase large items debt free. There could also be other uses for the money such as investing it in shares or managed funds.

6: Keep Yourself in Check: Make sure you keep reviewing your budget and looking for areas where you can make further trimmings and savings. A budget is not a survival plan, it should help form your long term financial roadmap to making you financial goals a reality.

Article provided thanks to www.compareyourbank.com.au which compares bank products and savings products including Aussie credit cards. Visitors can then apply online for any featured products direct with the banks.

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