Having a family budget is an essential foundation of managing your money but, OMG, they can be so boring to put together.
There. We’ve admitted it. No wonder people yawn at the prospect and do everything to avoid attempting the task.
It shouldn’t be an excuse for not having a budget at all. So let’s think outside the square and try to liven up the process.
1. Assemble your favourite snacks and drinks
It’s worked for us over the years. We’d put the kids to bed then Libby would get out a plate of cheese and fruit and I’d open one of our favourite bottles of wine.
We figure the cheese, crackers and fruit provide nourishment to feed the brain and ensure clear thinking. The wine might have dulled the brain impact of the snacks but we’d pace ourselves so it wouldn’t have too big an influence.
2. Work out the goals you have for your budget surplus
A big mistake people make when budgeting is that they start with the tedious stuff.
Instead, start with the incentive. What do you want your money to achieve? A trip overseas, a new car, a fridge, a deposit for a house?
The family budget has to have a purpose. Talk with your partner about a common goal, settle on it and then have a photo of it (or something similar) in front of you while putting the budget together.
Once it’s complete, transfer the photo to the fridge door so it is a constant reminder when you’re making sacrifices.
I read a magazine story on a lodge high up in the Himalayas in northern India. I fell in love with the prospect of visiting and we kept it on the fridge door for about three years. We got there in the end, loved it. It was so worth it and the perfect incentive.
3. Use budgeting software
Forget a paper, pen and calculator. There is an enormous number of electronic templates where you just plug in the numbers and the calculations are done automatically.
The tools and resources section of your bank’s website will invariably offer a budgeting template while ASIC’s www.moneysmart.gov.au site has a good one too called TrackMySpend. These templates are prompts to make sure all the information is collected.
4. List your savings goal plan first
The hard part of any budget is listing sources of income and then all the monthly expenses. This can be tedious but it is important and has to be done.
To make this part more enjoyable, and before listing any expenses, work out the cost of the goal you’ve decided on. Then breakdown the cost (trip, car, fridge etc) into a monthly instalment savings plan over a set period of time.
Then, as part of the expenses budget, add a savings goal line and plug in the monthly amount you need to achieve to make that dream come true. By doing this first, you are psychologically reinforcing that this is your top priority.
It’s a separate line in your expense budget, it’s important, you’re going to make it happen.
Then list the other expenses. Start with the non-negotiables, those expenses you must pay every month and are the necessities of living: rent, mortgage, life insurance, groceries.
Follow that up with more discretionary expenses which are non-essential and could be adjusted if need be: TV subscriptions, gym membership, Uber Eats.
Use credit/debit card and bank statements to tally the different expenses and the timings of irregular payments like car registration. Record any incidental cash payments on your smartphone for a month to get a gauge of regular leakage on incidentals. They all add up.
Then list your sources of income, usually a much shorter list and easier to complete than expenses.
When the budget is there in front of you, we bet you’ll be amazed at the amount of money spent in different areas.
Once all the figures are plugged into the template hopefully the total equals a budget surplus and your income more than covers expenses.
If it doesn’t, you need to make some decisions. The goal is to have at least a balanced budget, which includes the savings plan to reach your goal. Play around with the template and adjust the non-essential expenses.
This will be guided by your individual priorities and preferences. One person may prefer to cut back on beer and wine while someone else can do without takeaway coffee. It’s up to you.
5. Increase your income
If, after paring expenses, the budget still isn’t in balance, you’ll need to look at boosting income.
Recent research shows one million Australians now have a second job to earn extra income and that number has grown enormously over the last two years. The so-called “gig economy” has created thousands of jobs which are flexible and produce strong income.
Everything from being an Uber driver or Deliveroo courier through to putting rooms on Airbnb or freelancing. There are plenty of options.
Side-hustles turn a passion into a money earner. If you love cooking, sell food to a local cafe. If you love playing the guitar, tutor others.
That extra cash will help pay for those goals and could even turn into a permanent money maker.
Originally published as How to make budgeting money easier