The Family Budget - Peter Switzer Shows Us Where To Start

Gold medals in the money marathon will only come from getting the basics right. So, before you get off and running you will have to take control off your spending. Some of the brightest people I know are financial duds, while some of the least educated, or more rightly, the least formally educated people I know are money whizzes.

The starting point for Wealth City is your income. Getting lots of it is an obvious tactic, but generations have found it's easier said than done. So, before we get to the more difficult , let's go for the achievable objective.

Let's assume you're on a fairly predictable wage for most of your working life. That means if you want to beat the pack that end up on the government's pension payroll, you must do something out of the ordinary. Out of your predictable pay, you have to find another source of income - drawing up a budget will show you that source.

Do Yourself A Favour ...

Pick Up A Pen And Eyeball Your Current Budget

 

 

Dollar Amount

  

Weekly Income (add up all sources but don't kid yourself )

$

 (A)

WEEKLY SLUGS

    

mortgage or rent

$

  

other loans

$

  

superannuation

$

  

food - bread

$

  

Milk

$

  

Meat

$

  

Fruit And Vegetables

$

  

Fares

$

  

Petrol

$

  

Alcohol / cigarettes

$

  

Newspapers / magazines

$

  

Gambling

$

  

School Costs (lunches, etc)

$

  

Entertainment (movies, videos, etc)

$

  

Restaurants, take-away food

$

  

Sporting costs

$

  

Others

$

  

TOTAL RECURRING COSTS

$

(B)

Big Ticket Hits (for annual figures divide by 52 weeks)

    

Insurance - House

$

  

Insurance - Home Contents

$

  

Insurance - Car

$

  

Insurance - Life

$

  

Insurance - Sickness / disability

$

  

Insurance - Medical

$

  

Council Rates

$

  

Car Registration

$

  

Car Repairs

$

  

School Fees

$

  

Telephone

$

  

Electricity

$

  

Gas

$

  

Doctors bills

$

  

Dentists bills

$

  

Medicines

$

  

Holidays

$

  

Presents

$

  

Hairdressers

$

  

Clothes

$

  

Books, CD's, etc

$

  

TOTAL COSTS

$

(C)

Add all your costs (B) + (C)

$

(D)

Take Total Costs (D) from Total Income (A) = Your Saving

$

What Now?

If you're like most of us, your budget possibly shows you're making an annual loss - your costs outweigh your income. Like the Federal government and the Prime Minister, you're running a deficit budget and the shortfall is being bankrolled by credit cards, personal loans, store accounts, etc. You need to find ways to cut your deficit.

Getting to the wealth finishing line involves a monetary marathon. Saving equals training and the more training you do, the more reward you get. This is where the budget comes in. You need a razor gang to trim your spending. You must cut and cut to go into surplus and better still, increase the surplus. The beauty of the budget you have knocked up is, it shows you all the areas milking your wallet or purse.

In the budget above, I listed about 40 areas where you fork out each week. If you can find ways to cut each back by a dollar, you could save 40 dollars a week. $40 a week times 52 weeks gives you $2,080 a year. And even that relatively small amount can set you off on an investing trail.

For now, the budget 'show and tell' pinpoints your weak spots and gives you a road map to the big-time race.

Whatever you do, don't cave-in early. Do the budget and find the savings.

I'm not recommending that you turn yourself into a monetary monk now - that's hard to do while you're raising your kids and sometimes need to spoil yourself. No, I'm trying to find you a head start . Putting your current budget on a Jenny Craig diet could give you the economic physique to be a player in the big-money game most people only ever watch from the back of the grandstands.

By Peter Switzer. Peter Switzer is a respected economics writer and commentator who over the years has written weekly columns in The Daily Telegraph, The Sun Herald, and The Weekend Australian.