BudgetMama

It’s that time of year when we look at our bank statements and declare “This year will be different, I will commit to a weekly budget planner in the New Year and start changing my spending habits!” Unfortunately whilst many of us make new years resolutions, most of us have broken them by the end of February, but if taking better control of your finances in 2010 really is a resolution you would like to keep, then one evening in January (or any time of the year for that matter) is all it takes to really grab that budget by the horns so that maintaining that feeling of financial motivation becomes almost second nature throughout the coming year.

To get started you will need to sit down with a pen and notebook.

Begin by getting out all your old bills from 2009 and get a feel for your typical spending habits. It’s easy to see that a large portion of your income is going to be taken up by rent or mortgage payments, and in today’s economic climate that is unlikely to change. However, other areas can be tightened up; for example, the phone and power bills can often be reduced by choosing different plans, using power more efficiently etc.

Don’t feel disheartened by the fact that probably 80% of your income is taken up by the necessities in life like a roof over your head, food, heating, gas etc. This is normal, modern day life requires a lot of expense, but it doesn’t mean you can’t enjoy life too. So realistically consider the things you enjoy in life and be committed to allowing for entertainment expenses. In short, a happy budgeter is a better budgeter.

If being an organized budgeter has not been one of your strengths in life chances are you have not kept receipts to review spending in area’s such a feeding your shoe addiction, keeping your home stylish, eating out, going to the movies and other ‘luxuries’ in life. Indeed we should all have the ability to distinguish between need’s and wants, but in order to set a realistic budget we must also accept that we will have wants, so identify them and include those spends in your budget for the coming year.

In one column on your note paper make a list of all your regular commitments, your rent or mortgage being the first.

Continue the list with all your regular bills, phone, internet, power, cable TV etc and write down the amount they usually are in a column alongside, some will be fixed whilst other may fluctuate depending on use, so just write down an estimated amount. Don’t forget things like insurances and school fee’s, and of course loans.

Now break these figures down to fit in with your income cycle, so for example if you receive your power bill every 3 months, but get paid every fortnight, then you will divide the bill by 6 and this will tell you how much out of your fortnightly income needs to be set aside for an expense. Looking at it this way means you will begin to think of your power bill as a $40 expense each pay, rather than a bill that is coming sometime down the track.

Now go back to the column where you have listed your bills and begin adding other things that are common spends for you according to your own unique lifestyle. Perhaps you drink coffee on the way to work everyday, that $3 coffee could mean a $21 commitment out of your pay cheque. You might be a regular lotto player, buy a weekly magazine, the daily paper. All these seemingly insignificant spends could add up to quite a bit as you are trying to keep a hold on your budget while wondering where all the money goes. The trick to being in control is a simple as being honest and realistic within reason allow yourself these simple pleasures.

Now we come to identifying our wants, for example, clothing is a necessity but most clothing purchases are actually not, again, there is nothing wrong with having a love for fashion, just acknowledge it and plan for it. Perhaps consider the time you are most likely to spend up on clothing, during the end of financial year sales perhaps, or at the beginning of each new fashion season. By understanding your normal spending patterns you will be in a much better position to make wiser choices when it comes to buying the things you want and by the end of the evening you should have a very clear idea of your personal spending habits and be ready to commit to a new financial you in 2010.

Now that you have a handle on your normal spending habits you should also consider setting aside a little each week for unexpected emergencies, and of course having a savings plan is always a good idea, but if you are in debt, focus on paying down that debt before worrying about savings.

One more thing. Before putting away all your old bills and new notes take a moment to focus on your goal to be a better budgeter in 2010. Close your eyes and take a deep breath, no matter how tight your budget, how deep your debt, you can improve things over the coming year. To make it easier you will need to create your own weekly budget planner either in a notebook or on a spreadsheet, after all, it’s no good having all the best intentions of a new year’s resolution if you don’t have the tools achieve it. So for great advice why not subscribe to my mailing list and then pop over to my shop to find out the features and benefits of using my own Budgeting System, it’s only $5 and worth every penny if I do say so myself. Go there now and start off the new year with a true sense of financial control, then pop out to the January sales and grab yourself a fab pair of shoes to celebrate!…it’s okay, none of us are made of steel.

Don’t you find nothing brings our finances closer to the front of our mind more than Christmas? A Popular topic of conversation around September is, ‘Oh my gosh, it’s nearly Christmas already!!!!’

As we begin to see signs appear saying ‘Layby Now for Christmas’ and ‘Taking Christmas Orders Now’ we can’t help but begin to get a little stressed, especially if we are already living that pay cheque to pay cheque lifestyle already.

Now there are all sorts of ways to relieve that stress, but it’s a little late for me to get into that only two days before Christmas! But, what I would like to talk about today is preparing for the year ahead, as with Christmas upon us and the New Year looming around the corner there is no better time than now to start thinking about your budget.

We’ve heard a lot of doom and gloom over the past year about corporate collapses, mortgage crisis, rising unemployment and the global economic downturn, however, it is possible to ride through these difficult times by taking one evening to really have an honest look at our spending habits and see where we can make improvements.

Take some time out as early in the New Year as possible to pull out old bills and note the pattern of spending they represent. For example, your power bill may reflect much higher usage at certain times of the year due to heating or air conditioning. Once you have identified this pattern it will be much easier to prepare for it so that paying those higher bills doesn’t cause undue pain in the year ahead.

You may be wondering how knowing you’ve got big bills coming will change the pain they cause. Well, it’s really as simple as calculating a figure to set aside out of each pay cycle to put towards those future bills that will make your life so much easier.

Preparing for future dated expenses is one of the most important aspects of planning and budgeting successfully. It’s easy to feel that some weeks you have little or no bills to pay and therefore have more money to indulge in other areas, however this is really an illusion because on the weeks you do have a big bill arrive you will really feel the strain on your budget trying to cover it out of one pay cheque. In fact, many people I talk to about budgeting tell me that they feel they are in a constant catch up mode because having to pay a big bill meant they got behind in other commitments and so begins the cycle of stress trying to make ends meet.

So, get a bit savvy with your finances. Look over 2009 and work out how much you actually spent on bills over the entire year. Divide that figure by 52 and you will have a weekly figure to set aside. Set that money aside somewhere separate from your regular everyday bank account, it could be a money jar, but a free online bank account is ideal.

If this concept is entirely new to you and you have absolutely no funds set aside for bills then you can expect to still have weeks where you will need to top up your jar/bank account to cover a bill, but don’t give in, persevere and stick to that regular set aside figure, and within a short time you will find that your household budget will be so much more manageable. In fact, you will even find that you have more money to indulge on other things than you did before as you will be breaking out of that stressful lifestyle known as ‘robbing Peter to pay Paul’ and replacing it with a budget that you are in control of, rather than the other way round.

Bring on 2010!

If you can afford to have a filing cabinet then get one, one of those little 2 drawer ones are perfect for the job. If you can’t get one, don’t want one, or don’t have room for one then a perfect alternative is a plastic tub or document box, the kind that are sized just right to hold manila folders. Basically what I am saying is that you need to have a specific place for managing your money.

You’ll need to get a packet of manila folders, then give the folders headings according to your income and expenses, plus create one for receipts also. Now you can keep your income slips, cheque butts and receipts all in one location and come tax time life will be so much easier.

Check with your local tax organisation about how long records need to be kept. Some need 3 years and others need up to 7.

Each year once you have completed your tax return, tape 2 pieces of copy paper together, then gather up all your paperwork for that year, wrap the two pieces of paper around all the paperwork and tape together to hold in place. Now you can place that years records at the back of your filing system and write the lodgement date on the part of the paper facing up and it will now be easy to locate should you ever need to.

1. One of the most valuable personal money management tips I can offer is to use a budget planner and you can get mine, the BudgetMama System right here. Having a visual idea of your finances makes the process of keeping track not only easier but more accurate and of course also provides you with that important feeling of control.

2. Opening an online savings account offers you a much higher interest rate than a branch account. Having no branch or ATM access also means you are more likely to keep your savings than dip into them on impulse as withdrawing from this type of account requires transferring the funds into your normal bank account and usually takes at least 24 hours.

3. Don’t save at the expense of your social life, but don’t let your social life stop you from saving. Studies show that people who include an allowance in their budget for enjoyable activities are more likely to stick to their budget and therefore save more in the long term. When you resent your budget and feel restricted by it you will be more inclined to break it and ultimately loose track of the entire thing. Remember, life is all about balance.

4. Review your budget on a regular basis. By establishing the habit of sitting in front of your budget planner and bills one night a week you will be developing a habit that ensures you are always on top of things. In time you will begin to notice ways in which you can improve your budget while freeing up more cash, or perhaps notice a few leaks that need to be plugged before they get out of control.

5. When it comes to regular savings, change your mindset. To illustrate; when you receive a bill in the mail you know you can’t avoid paying it, there is no way around this, it is a social norm. Start thinking of your savings account as a bill that must be paid and even if that bill is only $5 a week; pay it before you do anything else.

6. These days most people (in the first world at least) receive their pay cheque as a direct deposit into their bank account. Decide on an amount of money you can reasonably save out of each pay and ask your boss or payroll department to split your pay cheque with a set amount going straight to your savings and the rest going to your normal account. With that small amount out of sight it is also out of mind and you won’t miss it.

7. Did you know that by shopping at convenience stores like the gas station and mini mart you could be paying between 25 – 40% more than you would at the grocery store? So, shop at the grocery store.

8. Pay loans more frequently; by paying down debt on a weekly or fortnightly basis rather than monthly you will seriously reduce the interest on the loan in the long term.

9. Recognise yourself and know your weaknesses. It’s okay to have weaknesses, we all have them, for some it’s chocolate, for many it’s shoes, but whatever your weakness is, don’t put yourself in front of temptation. If you know you can’t walk past your favourite shoe shop without hearing angels sing at the site of a gorgeous pair in the window; then take a different route.

10. Finally the last of my personal money management tips is this: learn to save money, emphasis here on the word ‘learn’. For most of us a savings habit does not come naturally. Studies show that in order for an action to become a habit it must be done over and over again, I think the standard here is 21 days. But we all know that good habits can be much harder to imprint on our brains than bad ones, so start off small. A great way to learn to save is to choose something you want that is small, say a digital camera for $300. Be specific about your goal by choosing the actual camera model you want then get a catalogue picture of it and stick to the fridge. Now we all know these days purchasing items on store finance is sadly more the norm than actually paying for it with cash, but don’t do it. Decide to prove to yourself that you can buy this item by saving your own money and remind yourself that you will be saving on finance fee’s as well as hefty interest. You know you need to save $50 a week for the next 6 weeks to get that thing which you desire, so whilst keeping your visual goal in mind set about saving that $50 and then reward yourself by paying cash for that camera in 6 weeks time. As you get into the habit of saving, believe me you will actually begin to enjoy the process of setting goals, visualising them, working towards them and then rewarding yourself at the end.

Call me a pessimist, or maybe a little on the cynical side, but this chain letter just appeals to my sense of humour, so I had to share….

This chain letter was started in hopes of bringing relief to other tired and discouraged women. Unlike most chain letters, this one does not cost anything. Just send a copy of this letter to five of your friends who are equally tired and discontented. Then bundle up your husband or boyfriend and send him to the woman whose name appears at the top of the following list, and add your name to the bottom of the list.

When your turn comes, you will receive 15,625 men. One of them is bound to be better than the one you already have. At the writing of this letter, a friend of mine had already received 184 men, of whom 4 were worth keeping.

REMEMBER this chain letter brings luck. One woman’s cat died, and the next day she received a hunk. An unmarried woman living with her widowed mother was able to choose between a Chippendale dancer and an Olympic swimmer. You can be lucky, too, but DO NOT BREAK THE CHAIN! One woman broke the chain and got her own husband back again! Let’s keep it going, ladies! Just add your name to the list below!

Hillary Clinton 1600 Pennsylvania Ave. Washington, DC…………………….