What's a Budget?

For instance:

Fiona earns $500 per week. 

Her electricity costs about $50 a month.

gas costs about $20 per quarter. (6.60 per month)

water is $100 per month.

phone is $200 per month.

internet is $50 per month.

food is $100 per week. ($400 per month)

clothing/gifts and entertainment is $50 per week ($200 per month)

insurance is $100 per month

mortgage is $500 per month

car loan is $200 per month

Petrol $70 per month

lunches $25 per week ($100 per month)

1901.60 total spending

This leaves Fiona with a debt of  901.60 on her credit card that she will never be able to pay off because she keeps spending.

First thing to do is stop buying lunches and take her own. (save $100) 

Is she spending too much on the phone?  Should she cut down.  (save $20)

Would she be better off on a different internet provider?  Some offer $25 per month. (save $25)

Could she get a better insurer? (possible saving of $50)

Is there any way to use less electricity, water and gas?  (shave off $60 per month)

What about food, are there ways of making things cheaper?  (make some things from scratch, not so much prepared junk (save $100)

Cut out spending on gifts, clothing and entertainment for a while - go to the library, have a clothes swapping party with friends and offer gifts of time or service instead of things. (save $200)

That saves her $555 per month just by tweaking a few things.  She's still behind, but not so far.  What else can she sacrifice in the short term to be ahead in the long term?  Not drive so much - carpool, take public transport, bike or walk. ($35) Cut down further on her phone ($150).

She's at $141.60 - perhaps she could consider consolidating her loans and having them all under the one lower interest rate.  Then she'd be able to make headway. 

It can be tough when you're counting the small change, but eventually it will grow and you'll be able to start actually saving the money you can keep.

Simple Savings is a great resource, a website designed for Australians to cut costs and enjoy living.  For a very reasonable fee you can join to read the whole vault - believe me it's well worth it!

Larissa Quinn

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This page last updated: 01/06/2007 02:23 PM