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.
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?