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Introduction To Budgeting



You've now created a budget, but we suggest that you take the opportunity to refine it if you want to. Perhaps your expenses are greater than your income, or you want to be able to save another $35 each week, for example.

That budget was concerned with what happened in the past. Now, let's plan for the future.

Take a moment to check through the following items to see if you need to include any of these in your budget:

  • Credit card repayments,
  • Interest charges,
  • Other debts you need to repay, or
  • Miscellaneous. This will be an account for expenses, such as newspapers, that are too small to justify having their own account. The account will also be used for the spending we can't explain.

Don't forget to save your budget.

If you're happy with your budget as it stands, click here to move to the final page.

If you want to refine your expenses,

  • Start with your fixed expenses, such as rent or insurance. These are the expenses that are the same each week, or month. Note that you probably won't need to change these.
  • The next group to review is discretionary items. These are costs that aren't fixed, such as petrol and CDs. If your expenses were too high, these are the items you'll have to change, but be realistic.

Update the spreadsheet.

  • If your expenses are still higher than your income, you need to go through the budget again.
  • The first task is to recheck your expenses for reasonableness. For example, don't cut out lotto completely, but perhaps reduce your spending by a couple of dollars a month. Review all costs. Take your time. Save your budget.

This is now your new updated budget. Does it look okay? If you're happy with it, please click here to move to the final page.

  • If your expenses are still higher than your income, you need to go through it again.
  • This is the part in the budget process people find difficult. It can seem that there's nowhere to run; everything and everyone seems to be out to make this an impossible task.
  • This is when the hard questions must be asked and answered. Involve the family in these discussions. Learning to cut costs and live with them can be a difficult lifestyle change. To succeed, you'll require the agreement of each family member.

Take a break and come back to it in a few days when you feel refreshed. There's no hurry. The intention is to make this work, but over the long term.

Now review your budget for the last time.

  • All expenses can be broken down into the following categories: fixed and discretionary, and essential and non-essential.
  • We've already looked at costs as either fixed (for example, rent), or discretionary (for example, CDs). Now let's look at costs in the categories of essential and non-essential.
  • Essential costs are those that relate to shelter, health, clothing, and food, as well as contractual obligations such as debt repayment.
  • Non-essential costs are those that could disappear without affecting health or safety, for example, a Sky subscription or video rental.
  • The non-essential costs are the costs to consider cutting first.
  • You must ask yourself, can I cut this expense out completely? If I do need money for it, what's the minimum I need?
  • Take a look at your essential costs. There won't be much room for adjustment here, but take each cost and review it. For example, you'll need to buy food and eat. However, with careful consideration, you may be able to reduce the monthly grocery bill by just a little.

Don't forget to save your budget.

Now that you've finished your budget, you're ready for the final page: please click here.

If, however, you've found that, no matter what you tried to do, there doesn't appear to be any way to make ends meet, please contact a specialist budgeting assistance organisation for personal and confidential assistance. Many people reach a financial crisis at some point in their lives. These groups help thousands of families each month. Please contact them, provide them with print-outs of the work you've completed so far, and they'll help you get back on track.