Top Tips Thursday #5 - doing a budget

Part 1 - how to do a budget

I'm going to complete this tip over a couple of weeks. First, I'm going to start with some basics for homework!

Expenditure

The first thing you need to do when doing a budget, is learning to know where you ALREADY spend your money. Easy, you say? But do you really know that all those $5 and $20 really add up to more than you think? Do you say "we spend about $x a week/fortnight/month on groceries/takeaway/bills?". ABOUT isn't enough. You need to know HOW MUCH. I'll bet you'd be surprised just how much in most cases!

Go through, on a piece of paper or even in Excel and list all your major categories of expenditure. You need a few columns too - the aim is to get around 2-3 months worth of information to REALLY get to know habits, and to try and include all of your regular bills.

Ours has categories, and sub-categories for our expenditure, as listed at the bottom. Don't have a random category for "Credit Card". You should get a credit card statement, so that needs to be split up into the different categories too! Don't be too vague either. Though, if you spend a lot of money at (say) Target, but you wouldn't know exactly what you would have bought, TRY and split it into gifts/homewares/clothes, or just put a "target" category. You'll have to work on that when you get to Part 2. And you actually start setting your budget.

Once you have your categories, you need to go through your statements and enter in all of your information. You can use best guess if you like. I've now got around 6 years of information, so I know my habits well. At first, it was a shock though! Some of the categories, I hadn't considered.

This is part 1 of my tips of how to create a budget. Below are the categories I personally use.

HomeBanking -Mortgage (variable), Mortgage (fixed), Mortgage (variable, extra), interest free payment

Food - Groceries, Takeaway, Alcohol, Other

Savings

Other regular expenses - Swimming Lessons, Preschool fees, School Supplies, WW, Pocket Money,

Transport -Fuel, Train, Car registration, Car CTP, Car Servicing & Tyres, Trailer Rego, M/c Rego, M/c CTP, M/c Servicing & Tyres, Tolls

Bills - Utilities, Rates, Electricity, Gas, Water, Telephone, Internet, Mobile

Health Care - Doctor Fees, Chemist, Other

Insurance - Health Insurance, Building insurance, Contents insurance, M/c Insurance, Car insurance

Clothing - Katy, hubby, DS#1, DD, DS#2

Animals - Vaccination/medications, Clipping, other supplies

Recreation -Entertainment/Leisure, Hobbies, Holidays, Toys, Other

Grooming -Haircuts, Dry Cleaning, Other

House -House Improvements, House Maintenance, Gardening, Repairs, Furniture, Appliances & Décor, Appliances, Other

Misc - Gifts, incl christmas, Postage, Stationary, Photos, Computer Supplies, Christmas Account



Income

Don't forget your income either! This is obviously equally as important. Make sure you know how much you get paid - albeit it weekly, fortnightly, monthly or less frequently. Include everything - dividends, interest, sales from your hobby, overtime, family assistance etc.

I personally split up our wage (well, hubby's), into "core" income - ie what is regular and what we KNOW we will get every month, and another category for his overtime or on-call allowance. This way we know our budget has to fit within his "core" income. Extra's - like extra takeaway, or special tickets, usually come out of our on-call allowance and is something we can go without - ie frivalous, not and usually unnecessary.