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Control Your money by Budgeting.

Peace of Mind comes from Knowing You can Pay the Bills!

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Step One A: Take Control of Your Money!

How to Budget

    This is a Step-by-Step Process to Identify ALL your Current Expenses and Income.

  1. List all of your Yearly Expenses.
    • Insurance - House, Health etc.
    • Registration - Car, Business etc.
    • Rates & Taxes - Property, Government etc.
    • Utilities - Electricity, Heating etc.
    • Memberships - Clubs, Associations etc.

  2. List all your Weekly/Bi-weekly/Monthly Expenses.
    • Groceries.
    • Transport.
    • Rent.
    • Clothing.
    • Telephone.
    • Entertainment.

  3. List all your Sources of Income
    • Salary or Wages.
    • Share Dividends.
    • Interest on Savings.

Multiply Weekly Expenses by 52, Bi-Weekly Expenses by 26, Monthly Expenses by 12 and add these Totals and the Yearly Expenses together.

Divide the Total Expenses by 52 - this is your TOTAL Weekly Expense.

Multiply your Weekly Income by 52, Bi-Weekly Income by 26, Monthly Income by 12 and add these Totals and the Yearly Incomes together.

Divide the Total income by 52 - this is your TOTAL Weekly Income.

When you subtract your Total Weekly Expenses from your Total Weekly Income you will discover your Total Weekly Profit/Loss.

Phew! or Arrrgh!

Which side of the Balance Sheet are your weekly finances?   If you are 'in the black' (you have a cash surplus) then you are not heading towards disaster.   If you are 'in the red' (you have a cash deficit) then you need to make urgent and rapid reductions in your expenses.

Fixing the Budget

This is the 'meat' of budgeting.   Once you have established your budget (details below) it is absolutely crucial that you stick to it.   No budget is any use if it isn't followed.   Remember also that a budget is a guide line for your finances and can be modified to manage changes in your life as long as you keep the overall budget in balance.   This means that if you have increased expenses in one area, you need to either reduce expenses in another area or increase your total income by at least the increase in cost.

Pay yourself First.

You have worked hard for your income.   It only makes sense to work as hard as you do if you make sure that you keep some of that money for your own future.   Who wants to spend all their working life to provide for someone else's retirement?

Deduct 10% from your Income For You.

Keep it in an envelope at home if You have to or in a low/no charge savings account until it has accumulated enough to invest.   This accumulating money is not for holidays, cars, rent, general bills.   It is ONLY for your future.   Read the page on Compounding to Discover why.   Keep your expenses below your remaining income. You may need to reduce or remove any expense that is not essential.   Some of these are:- Entertainment, Clothing, Telephone, Transport etc.   Some expenses are fixed and/or controlled by some one else.   It is difficult to change these charges.   Examples are:- Insurance, Registration, Rates & Taxes, Utilities etc.

Begin increasing your income.

You can find many different ways to add a little extra money into your Budget process.   It need not be an extra job, it could be as simple as a car boot or garage sale.   Perhaps you can mow a couple of extra lawns on the weekend for the neighbours and make an extra $100.   Run some errands for a house-bound person.   Look on the Businesses page and the Recommended Reading page for some more ideas.   Treat any extra income in the same manner as your normal income.   Put 10% into your saving for your future.

Now What?

You need to put aside the amount of the expenses you have calculated each week.   Put the expenses money into it's own envelope / account and only use it to pay the bills as they come due.   If you have done your calculations correctly, you will always have the money to pay the bills as they fall due.   There is nothing that feels quite as good as knowing that when you open any bill you can pay it.   In the beginning you might be a little short because the accumulation is a little behind the bills but it will all balance out if you stick with it.

If you follow this simple Budget carefully and consistently, you will get your finances under control, your bills will be paid on time, you will have an ever increasing investment account and you will have much reduced stress levels.   I understand that this looks very simple.   It is.   Leaving your savings and expenses money alone when you see it growing and you think that you 'need' that new gizmo or widget is far More Difficult.   Be Strong and begin the process of Growing your Personal Wealth - the end result is well worth the initial difficulty.

Please take the time to invest in your own future.

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