Achieve Your Dreams, Perth’s pre-eminent coaching service, specialising in budgeting for families, seniors, retirees, migrants, ex pats and small business presents another insight into Budgeting.

I spent most of my career as an accountant in private practice, specialising with small business, and I am now retired. I have done hundreds of budgets, from family budgets to multimillion dollar budgets for SME’s. I was also a qualified Financial Counsellor, and volunteered for St Vinnies – that has now lapsed.

So let’s start:

1. Understanding the Cost of Living in Australia
   • Cost of living may be very different
   • It may appear more expensive to live in Australia, but wages and income are often higher too
   • Peer pressure – resist at all costs
   • Expectations – keep them real
2. Essential Budgeting Principles and Tools
   • Essential to have your income and expenses balanced
   • Essential to have a budget – as painful as they may be they will tell you instantly whether you are living within your means, you need extra income or reduce expenses, or a little of both – once you know you can make further decisions. For a family budget to work the whole family must be involved, but be careful not to alarm children, as they may feel the family demise is imminent.
   • Essential to have a savings plan for unexpected expenses
   • The 10 – 20% saving ratio
   • Live to your lifestyle
3. Maximizing Savings and Minimizing Expenses
   • Invest where you can:
     • You need short, medium and long term investments
     • Pay extra off your mortgage and get a redraw (home owners – short term), high interest bank accounts, index funds (non home owners – short term, but will pay tax), shares, index funds, investment property (medium term – 10 – 15 years), superannuation – (long term – not easily accessible before age 55). Most transaction accounts have almost zero interest.
     • As an example, by paying an extra $10 per month on a $300,000 mortgage at 6.52% interest over 25 years, you can save around $4300 over the 25 years, and paying extra into your mortgage is not taxable.
     • Beware high risk investments – Crypto, businesses you know nothing about, high interest loans – much higher interest than normal, despite what they offer as security –  can be scams, antiques and art, unless you are a respected expert.
   • Save where you can:
     • Ignore ‘sales and specials’, unless you have an immediate use for the item and can afford it – it’s in your budget.
     • Check all small spending amounts – are they essential – they are often under estimated  but add up.
     • Convert weekly spending into annual spending i.e. $10 per week is $520 per year
     • Make use of Lay By’s – most large stores have them.
     • Develop a weekly menu and stick to it – reduce waste
     • Use the internet to find bargains
     • Make use of Op shops, Gumtree, Marketplace etc.
     • Shop around for services you need and get firm quotes
     • Reassess spending on gambling – Lotto tickets, betting, Casino, religious contributions and donations.
     • Get automated payments of your recurring expenses, including paying your credit card by the due date – you can be charged fees for late payments and it can affect your credit rating.
     • Pay off credit card by due date – it’s an expensive source of credit
     • Buy the equivalent of a CBA Wealth Package – reductions in mortgage rates, credit card fees etc. $395 per annum.
     • If you have manageable debt, arrange them by interest rate – highest rate at the top – pay the minimum payment on all and any excess on reducing the highest interest rate debt, and continue down the list until all debt is gone.
     • Try to negotiate with your credit provider for the lowest fees and rates – “I may have to change banks – I’ve been offered lower fees by another provider, or whatever else works for you”
     • Put credit cards in a drawer, do not carry them with you, unless it’s a necessity, and unless you can resist the temptation to spend, cut them up at the first opportunity, and get no fee debit cards.
4. Building Financial Resilience for the Future
   • Have a long term plan – do not be panicked into making decisions – get advice!
   • Develop budgeting skills and beware of cultural expectations.
   • If you are a couple, delegate financial tracking to the partner who is best at it
   • Accommodation costs are exceptionally high at the moment – this is NOT the norm, but may take several more years to stabilise – discuss with your partner or trusted professional.
   • Understand that rearing children is very costly, but the costs ease once they leave school
   • As you age understand your financial priorities will change
   • Put off expensive purchases and where possible discuss with your partner
   • You don’t need everything new – utilise the 2^nd hand market – Gumtree, Marketplace etc., but have an expert on hand especially for 2^nd hand car purchases.
   • If you are in serious financial trouble contact a Financial Counsellor – the service is free, they can suggest many options you may not know about – National Debt Hotline 1800 007 007

Good luck, if you need further assistance I can be contacted through this site.