Household Budget - What's yours?

Hi all. We desperately need to curb our spending so a family budget is in order!

I would love to hear about your household budgets and any tips you have?

My wife and I are thinking of holding a certain amount of cash each per week for general spending. Other things like groceries and fuel will be separate and paid for on our credit card.

We've always worked hard and had good incomes so a budget has never really been a consideration for us. Now we have two young children and we really want to get ahead over the next 10 years to ensure we have the freedom to invest, holiday and enjoy life the way we want it without having to worry about money too much.

 

Start reading Mr. Money Moustaches blog.... take what you like from it, and feel ignore the rest!

 

Knowing the difference between a 'want' and a 'need'

 

I like to have my savings come out the day after pay day and go into an account that punishes me for withdrawing. In my case I use the ANZ Progress Saver where I effectively don't get interest if I withdraw it, I have several of these setup for different goals, so for example if you want to put $100 a week away for the kids schooling these would be a great way of at least strongly encouraging you to never touch it. The other positive of taking the savings out up front is obviously that you learn to not spend because the account is looking good. If you have a property and are using an offset this might not be as productive as keeping it together in there which is a pain. I also don't have a card for those accounts so can't withdraw it without first transferring (this worked better when we didn't have smart phones that made that easy!)

Of course you need to create a budget before knowing exactly how much to take out, I'd be aggressive, you'd be amazed how much crap you cut out by setting a tight budget and living to it. The key when you start out is to actively track the budget as well, no point setting it and then not seeing if you've matched it! There are a ton of resources to do this, from things like Xero or MYOB right down to the old pen and paper ledger. I'd probably start with a very simple excel budget and piece it together from there.

 

I am, and always have been, quite 'uptight' (being the nice word ) about budgets. I even budgeted my pocket money as a kid - nerd alert!
BUT the best tip I can offer is get a pen and paper (and a drink as it can bed tedious) and write down EVERYTHING you spend. I try and budget for everything from big home loan repayments to small things like haircuts etc. The list is quite long! And sometimes can't stick to it but as long as the bills are paid and the amount I designate each fortnight to come off extra the PPOR loan is paid I'm happy.
It is tedious but I like to know where my money is going and its not being wasted.

 

I'm on a mission to do the same!

Managing personal expenses

I have worked out the fixed expenses - insurance, rego, water, electricity, phones, internet etc that hang around each month and worked out the average each month then take it out of pay into a visa debit account so it's all sorted and no surprises.

As for spending I go through all expenses and see where it's going. Need to get on top of this, the thread above has apps etc to use to track automatically.

 

I should add, I work off a homemade spead sheet that tracks spending (in and outgoings) and what the account should hold each day. As I said its quite intensive!

 

I could not tell you what we spend on household expenses. If we need something that has to be bought, it gets bought. Kids need clothes, bags, dentistry, medical, sports equipment, etc etc. You will drive yourself crazy trying to budget, so my advice is don't even try.

 

@Propertunity thats how we live now...but I feel like I am forever transferring cash to the credit card and that we just spend without considerations of costs.

 

For me, I set a certain amount away that I save. I save this no matter what. It goes into my offset off an ip. Then I have an account that I put a certain amount in for fun things, dinners out/ movies/ etc. Any overtime goes into this account as well, that way I work harder and do the overtime. I have an account that I put away for holidays as well and don't touch until holiday time, that way I don't overspend. This way it's not time consuming either, save first , left over goes in the two accounts, live off and have fun with one and holiday for the other.

 

I think the idea of a separate account is great but then it's not offsetting against your mortgage so to me it seems like a waste of money. @Terry_w do you know if ANZ or any other lenders will allow multiple offset accounts?

 

Well for me it's very minimal money in the accounts, most into savings so it doesn't matter that much. If I didn't do it that way I would spend more and lose the benefits of the offset anyway through not saving first. For me it's 300 to live off a week, 100 for holiday, 1400 into savings, I don't have a ppor yet, it goes on offset to ip. And I live in s granny flat so I'm saving a lot ATM. Will change soon

 

When I was earning regular wage the pay would go in and within 24hrs distributed everywhere - I'd pay every bill a monthly amount - eg western power would be paid 1/12th of annual amount etc.
Credit card would be paid off monthly and there was a cash amount for discretionary spending which was kept separate in another account.
You could try an experiment for a month where neither of you are allowed to put anything on the credit card unless you ring and tell the other. It will make you think twice before using it.

 

Dont even worry about the offset. The richest man in Babylon says to pay yourself first, 1/10 of your wage goes to you (save it). That amount isn't going to be huge and it's better to save say $150 /wk than it sitting in offset saving you $3 in interest but then you still spend that 150.

 

Works differently for everyone.

Our method may be crazy but it works for us :
1) Our income goes straight into the offset account.
2) All expenses gets put on the credit card, that way we can capture where the money is going.
3) I will then record all expenses on Quicken and will look at it monthly. For example if we went overboard with groceries (above average), our mindset will then be to cut back on excesses such as snacks and buying cheaper meat etc
4) We also put aside X amount of dollars for entertainment, dining out, junk food etc. If we don't have enough in that account to dine out, go out etc we stay at home.

The above method may sound crazy, insane but it has worked for us for the last 9 years and I guess we probably got used to it

 

Yeh @bob shovel you're right. I had a light bulb moment and realised its money that'll get spent anyway so it's offsetting next to nothing.

 

Thanks to all the tight asses for the responses. Some awesome ideas here.

 

Is it just me, or does saving only 1/10 of your wage seem like a low amount?

 

Depends where the rest of your income is going, if you have a few kids and lots of ips then I would say probably not.

 

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that's pretty low, are you having caviar every night for tea