• Now that a new year has arrived, it's a great time to take stock of your finances and revisit your household and / or business budget. Budgeting is perhaps one of the most basic and the most effective tools for managing your money, yet most people neglect to do one. The task of sitting down and doing a budget may seem overwhelming at first, but the benefits make it worth the effort, including:

1. It enables you to see exactly which direction your money is going. If nothing else, this makes you more aware of what is coming in and how fast it's going out.
2. It helps you organise your spending and saving. We always recommend that people save first and then spend what is left over.
3. It enables you to save for expected and unexpected costs that come up.
4. It keeps you focused on your money goals.
5. It helps you determine whether you can take debt on and if so, how much.
6. It gives you control over your finances. 

So what makes a good budget? The key is to keep it simple, and a good way to get started is to:

1. Gather all your financial information, such as bank and investment account statements, recent utility bills and any information about the money you have coming in and what you spend it on.
2. Record all sources of income, such as your salary and outside income (e.g., interest on investments), etc. Write down your total income as a monthly amount.
3. List all of your expenses, such as rent or mortgage repayments, car repayments, mobile phones, insurance, groceries, petrol, utilities, entertainment and education expenses. Make sure you don't leave anything out.
4. Split expenses into fixed and variable. Fixed expenses broadly stay the same each month, while variable expenses change from month to month. So, you'll have to average these.
5. Once you have totalled everything you can see the bigger picture. If your income exceeds your expenses, you're off to a good start. If it's the other way round, you are living beyond your means and it's time to make some changes.

Make adjustments, so you can balance your income and expense columns. This means all income is budgeted to a specific expense, including some savings, whether that's in an investment fund, superannuation, or just a savings account. If your expenses exceed your income, look to see what can be cut – or consider how you might be able to increase your income, by taking a second job or working to get a promotion.

If you would like help with your budgeting, please contact Dominique Schuh in our office on 54804877 and she will assist you with some of our budgeting tools.