From the monthly archives:

July 2007

How to reduce your living expenses

by Anthony on July 4, 2007

Reducing your expenses is one of the best ways to increase your savings. By spending less each week you will gradually build up more money to inject into interest earning investments. We list some of the ways to reduce expenses below

Basic Living Expenses

These are generally the most difficult expenses to reduce, but reductions may be necessary if your basic living costs are higher than your income.
Food & Shopping

  • Instead of buying food and a drink, pack your own lunch for work or school. An average lunch costs $10 and a drink can cost about $3. If you buy both two days a week that’s $52 a fortnight and $1352 a year.
  • Be organised about your shopping – shop at the same time every week (or fortnight), know how many meals you need to shop for and make a list of what you need before you go to avoid impulse buys.
  • Shop at a supermarket that is close to you so to save on petrol costs.
  • Look at catalogues to find the best buys. Some food items are cheaper in bulk and can be frozen such as meat and bread. Many perishable items are reduced just before closing time.
  • Avoid buying junk food and pre-packaged dinners. Not only are they bad for your waistline but fresh meals and snacks are cheaper.
  • The size of packaging is often misleading – compare weights (written on the packaging) when comparing prices.
    Use cloth nappies instead of buying disposable nappies. Make your own baby food instead of buying it.

Clothing
Use clothing pools for school uniforms and go op shopping for unique bargains.

{ 1 comment }

Budgeting part 3: Gathering information and calculations

by Anthony on July 1, 2007

Income

First you need to work out and write down your net income. You can find your net income on your payslips or Centrelink statements. You could also check your bank statements or tax return. Include any new income that you may expect.

You will need to distinguish between:

  • Gross Income - your income before tax and other deductions are taken out
  • Net income - your gross income minus tax and other deductions such as superannuation. Net Income is what you actually receive.

Tip: Your income is all regular money you receive including child support and the family tax benefit.

Expenses

Next you need to work out and write down all of your expenses. Most important are basic living expenses such as rent, utilities, clothing, food and transport. You also need to include other necessities such as insurance and medical expenses. Leave a gap or use headings so you can easily see which are your living or essential expenses and then work out and write down luxury or easily reduced expenses such as gifts, regular trips to the movies, shopping, takeaway or holidays.

Caculations

Now that you have written down your income and expenses:

  1. Add totals for each.
  2. Deduct living and essential expenses from your income. The amount that is left is called your disposable income.
  3. Deduct your luxuries and other non-essential expenses from your disposable income.
  4. The amount (positive or negative) that is left after this is your balance and can tell you a lot about your financial situation.

Congratulations! You now have a record of your income and spending. Now you can see where your money comes from and more importantly where it goes!

{ 0 comments }