Budget Your Way To Wealth
Increase your wealth with a budget. Budgeting is not hard. Debt support companies will ask you for a budget before offering their solutions to your debt problems. So get busy now and get your budget completed.
A budget is simply a forecast of earnings and expenses over a given period - weekly, fortnightly, monthly or annually - set down as a document, which you can use as a basis to guide your future spending patterns
There are two parts to it. The first is income, which may be wages or salary, income from business activities, shares or trust distributions, capital gains from asset sales, or social security payments.
On the other side is expenditure. This includes fixed costs such as food, transport, petrol, rent or mortgage payments and childcare, and also fixed periodic costs such as council rates, utility bills, or insurance premiums. Then there are discretionary costs such as holidays, travel and entertainment, which tend to vary over time
When preparing a budget, the actual figures you use should be based on what you have spent in the past, taken from receipts and bank statements. Or they can be a “guesstimate”.
After all the entries have been made, income and expenses are totalled separately and expenses are deducted from income. If there is an amount left over, this is how much you have to save. If expenditure exceeds income, this shows how much you are going into debt.
With this reckoning of your spending patterns, you can look at ways of cutting back on spending
The budget itself will also need to be reviewed periodically. The best budget is the one that works for you.
A budget is as much about what you do as what you’d like to do.
Remember to pay yourself — first and last. A budget isn’t carved in stone. It needs to be flexible and keep up with your priorities and the things you do day to day.
Don’t kid yourself. To work, your budget needs to reflect reality. If you spend $100 a week on beer, it needs to be in there Then look at where you’re spending your money and decide if each item is: essential helpful nice to have an indulgence a key goal.
In the most complicated scenario you could find your fixed costs are eating up your entire income so you’ve got a lot of work to do. If you sound more like the latter you might need to consider simplifying things a bit — for example, if your car repayments are expensive it might be time to consider a cheaper model or using public transport if possible.
Following are some of the things you may like to include. Rent or house repayments. Fees for study Utilities (Gas, Electricity, Phone) Food General household goods. Credit card repayments. Loan repayments (eg. Personal, car or student). Insurance (health, home and contents, car). Transport. Personal (clothing and haircuts). Entertainment. Miscellaneous (gifts). Holidays (if you are saving for one). Car payments, petrol, repairs, or insurance.
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