Articles Budgeting, Economics and Finance A Novice's Guide To Budgeting - Part Four
| A Novice's Guide To Budgeting - Part Four |
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| Friday, 07 March 2008 09:01 | |
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We've found out how much we own, owe and are worth. We've worked out what we've promised, and what all our other regular expenses are (fixed and variable). We've found out where the rest of our money goes, and learnt to set up a spreadsheet to sort out all this information. This week, learn how to use the data efficiently to set yourself some goals. Step Ten: Get a view Now, you need to add up your total earnings and your total expenditure. You can put the numbers into a calculator or you could program the spreadsheet to do it automatically. To program the spreadsheet to add the totals, type =sum into the cell and then either highlight the cells which contain the figures to be added or you can type the range manually. If your figures start at C3 and go until C42 then you would type =sum(C3:C42) and that would automatically calculate the amount, and update each time you change a figure. Make sure you add you income and expenditure separately. Now, subtract your expenditure from your income. This will let you know if you are overspending your income. If the figure is unusually large (say you have, in theory, $10,000 a year unaccounted for) you have probably forgotten entire categories or underestimated a lot of your expenses. Step Eleven: Set a goal Now you have a good picture of your finances, you need to set a goal. It could be getting back into the “black” if your expenses are greater than your income. It may be saving for a holiday or paying more off your mortgage. Whatever your goal, it is entirely up to you. It is a good idea to set a timeframe to achieve the goal in, and make it realistic! You are not going to change from overspending your income to the tune of $5000 a year to saving $20,000 in a year for a grand overseas holiday (Unless you earn a six figure salary and gamble your money away!). Step Twelve: Review and make changes Now, starting with the most flexible categories (magazine subscriptions, entertainment, dining out and take away food etc) try to make a reduction in as many areas as possible, or cutting out entire categories – are there magazines you don't read that you should cancel your subscription for or simply stop buying? Work your way up the list until you get to commitments and bills that you can't eliminate (rates, electricity etc). Hopefully with a bit of effort, you can set a realistic budget and achieve your goals. There are plenty of websites, including Aussies Living Simply, that have plenty of budgeting hints and ideas on ways to cut back. They should help you with some ideas of where you can cut back. Step Thirteen: Sit back and relax Sit back and relax, knowing that you now have knowledge about where your money is going and how to stop it slipping through your fingers. Knowledge is power. You are now empowered to make changes in your finances! |
