Sco-Mo's Budget Tips
I was listening to an interview with the Federal Treasurer Scott Morrison recently and he was talking about managing the economy, the billions it costs in health, infrastructure, defence, education and so on. I don’t envy him the job of trying to make that budget work. But then he said something profoundly simple. If you’re spending more than you’re earning, it’s not good.
That applies to your personal budget as much as it does to the Australian budget. It prompted me to have a look at my recent bank statements and guess what? That’s what I was doing – more was going out than coming in and over a twelve month period I could see my budget going into the red. Something had to give. I have all my expenses already mapped out month by month when it comes to electricity, registration, mortgage etc but where I was letting myself down was the day-to-day stuff.
Understanding where your money is going daily is critical. Things like coffees, school lunch money and 6-weekly hair colours…
I started noting down all of those incidentals and I was blown away by how much these added up...
My 19 year old son who is much better at managing money than me said “mum, you need to stay in the room with your money. The minute you leave the room, you become disempowered”. He was right. I often leave the room and stop watching those daily spends and that’s when I run into trouble.
Another area of concern for me is managing the direct debits. Have you ever been caught at the checkout without money because a payment has come out of your account? You mumble something about the funds definitely being there and it must be the card playing up before hastily retreating to your car in embarrassment, leaving your full trolley behind….
While I was walking out of the supermarket this week there was a charity set up near the exit with a couple of blokes asking how my day was going before I shut the conversation down with a polite “no thanks”. If you can’t afford to pay your bills, you can’t afford to donate to charity and certainly not the charities that are after the regular monthly payments. If it’s a once-off raffle ticket I’ll consider it if I have the change, but signing up to a “small payment of $20 a month” if you can’t afford it is dangerous.
I cut back my Foxtel plan from $130 a month to $51 and honestly, I haven’t noticed a difference in having a lack of entertainment options.
The fixed interest period on my home loan is up so this week I spoke to Robert Projeski from Australia Mortgage Options. Robert suggested fixing a part of my home loan 80% and then 20% at the variable rate. I didn’t even know you could do that!
It’s what Rob calls a “financial health check”. I’m a long way from completing it and I’ll have an update in next week’s newsletter but I’d love to hear your tips for managing your budget and in particular, those day-to-day amounts……