Thursday, 21 May 2015

It's Time To Update The Budget

Do you budget?  What kind of budgeter are you?

By that I mean do you:

a) Plan out all of your spending, saving and commitments and then break these amounts down to fit into your pay cycle so that every pay a little bit is put away for all the different things?
b) Do you put away regular savings and then just pay you bills as they come along knowing that you generally earn more than you spend so it just works it's self out?
c) Do you live budget free?

Until I decided to go back to Uni I was definitely in category b)  
For me this meant that I put away regular amounts of savings, paid bills such as power, insurances, charity bequests and the mortgages by installments and just paid other large expenses like car registration, car servicing and holidays out of savings when they came along.  I also had no set budget for things like groceries, entertainment, gifts, celebrations or treats.
I used to know someone who used an envelope system and every week a little money would go into each envelope and would later be used to pay bills.  I tried this for a while but hated having lots of cash lying around.

Image result for budgeting

Combined with my decision to go back to Uni I have also elected to cut back my hours at work so this means if I want to be able to keep up with all of my savings and financial commitments I needed to look at my budget and make some changes.

To start with I downloaded the Excel version of this budget planner provided by the government.  It is easy to use and allows you to indervidualise it and gives you an ongoing tally of what is left each month.

I started by inputting all of my projected income (based on my reduced hours) and expenses to work out how much I was going to have to left or would be short by.
After doing some quick sums I knew that I had to cut some of my expenses.

These are some of the things I have done to reduce my expenses:
I cut a regular donation to a charity.  I have supported them for 5 years and I feel no guilt from stopping the payment now.
I have reviewed our insurances and have reduced out building and contents insurance sums insured as they have crept up.
I have reviewed our home phone plan.
I have not renewed one of my magazine subscriptions

We don't tend to go out a lot and our family only does gifts at Christmas time so I was not too worried about if I was overspending in these areas.
I do not have any credit card debt and have a good amount of savings (but I do not want to tap into this) so I still need to look at other ways of saving a few more dollars other wise I will have to reduce my savings.

One of the biggest revelations was when I reviewed all of our grocery receipts for the last few months and this looks like an area I can make a big saving, but more about that tomorrow.

So when/why did you last review your budget?
Do you have any great tips for reducing expenses?

8 comments:

  1. I used to fit into your Category B but this year, having taken extended leave from my job, we can only count on one income and it's been a challenge so far! I collected up all my food dockets for a month and found that we spend a lot on food so it's an area that I have started to 'trim' expenses in too. I've started menu planning, reinvigorated our veggie garden to be more productive, am watching food waste carefully and have switched my organic food co-op. I've always done a lot of cooking/baking here at home but now I make even more and have gone back to some good, old-fashioned cheap recipes.

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    1. Good on you Ellen for finding a way to make your leave work for you. I have been planting things out in the veggie garden but since we are selling I have planted less than I normally would.

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  2. Hi Fiona, We reduced our insurance premiums by lifting the Excess to the maximum. We felt that since we have no debt and cash in the bank we could easily carry a large excess. Insurance is now just something to cover a serious catastrophe.

    Whenever we didn't spend on something in the budget we transferred the amount to a savings account.

    Jean keeps those little plastic coin bags and purloins all loose change. Amazing how often she has a substantial deposit.

    We track prices from different stores to ensure we pay the least for any item. Sometimes this means buying a larger container to reduce the per KG cost.

    And of course we always take our meals and coffee with us from home. No shop bought meals or drinks.

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    1. Hi John and Jean We have always had quite a high excess for the same reason and in the past any extra money has gone towards paying off the mortgage quicker or into savings. Like you I always look for the best value for money on products that we use on a regular basis but I try and be careful not to buy in bulk for things that we don't use often otherwise they might go to waste.

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  3. uh oh. The dreaded "B" word. We tend to belong pretty much in category B also, but this is a timely prompt. I'm about to have a look at our insurances too which seems to be a big money drain as we never seem to claim on much. Raising the excess is a good idea I think. cheers Wendy

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    1. Yes Wendy raising your excess is a good way of reducing your costs. As it gets close to the end of the financial year it is a good time to look at the budget.

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  4. We have been keeping a budget for aobut the last 5 years, but suddenly this year, we seem to have more expenses than income! Insurance has skyrocketed, and there is nothing we can do about that. Food really is the only area that we have any flexibility with, and i have been meal planning and trying to stick to a shopping list, but still spend about the same. I look forward to some of your ideas about how to shave the grocery bill.

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    1. AA at least you keep a budget and were able to recognise your expenses had increased. I hope I can share some of my tips for tasty healthy frugal food.

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