Household Budget - What's yours?

Depends on your wage

 

Only when I enjoy a few cigars with some JW blue label.

 

I'm coming over to yours for dinner. I will bring some ice for the JW and to keep the caviar cold.

 

Not a lot of fun money in there
A certain 16yo saves 40% of his pay for a car, 20% savings for any other items he wants to save up for (guitars, computer games etc) , 20% spend on anything.
At 16yo doesn't have a big list of items to budget for though.

 

Doesn't "save" mean put it away, and the rest is for spending? That's why I questioned it. Seems like too much fun money if you are only saving 10% of your wages?

 

I think the moral of the story is to put something aside, then to invest with. You choose the number.
Plus the old saying "the more you earn, the more you spend ". Take out a chunk then your sure to save something.
Depending what you earn by the time you work out bills, food, fuel, mortgage /rent, there may not be much left. The 10% locks something away before you spend that pay

 

My wife and I are in a similar situation.
For this month we decided to strip everything back to basics and set a challenge to only spend that. Carry a reminder with me in my phone and wallet of our goal.
So January is just necessities.
E.g. No buying food.. Make it for work. No buying coffee.. Have one before work. Every spending decision this month I will ask.. Is there a way to get the same outcome without spending or spending little.

Seemed like a mammoth task but 6 days in I'm kinda enjoying it!

Does it become habit for the year? We'll have to wait and see. I can see the would be projected savings for the year and it's pretty enticing

Cheers

Scotty

 

Pretty much everyone says to - spend less than you earn.
I see this as very limiting as you try to only work with what you've got.

I think the approach of - earn more than you spend, is so much greater and opens up many more opportunities for unlimited growth.

Too many people use the first method and blindly limit themselves for too long.

 

I use Suncorp - their accounts are amazingly easy to set up. Once you're in 'their system' and have a main transaction account set up, it's very easy to just apply online for sub-accounts (which you can name however you like, making them very easy to manage). I think they allow up to 10 sub accounts.

I currently have 1 main and 3 subs -- for day-to-day expenses (e.g.. groceries), long term bills (eg. car rego), long term savings (eg. overseas holiday), and IP rental income/expenses. The total value off all the accounts is used as an offset against my PPoR loan.The great thing is that it's also very easy to set up inter-account transfers, so once my pay comes in, the money gets automatically divided up between all the accounts according to my set values - I don't need to do a thing

 

This is the easiest way to get on top of it.
Especially if you have kids.

 

All my mortgages are about to become P&I, I call that forced savings. We cancelled the credit cards just before Christmas and haven't suffered at all so far. I'll knock as much off the loans as possible in the next couple of years, no more big trips for awhile.

 

What's the purpose of a budget exactly?

I'm not understanding the benefits?

I don't know. We just spend all our money on the things we have to spend money on, those aren't negotiable, and then whatever is left over we blow on renovations. If we have more left over then we need to spend on renovations we will try to have a buffer. If there is more than we need to have a buffer then my wife lets me buy toys

 

I also like to have at least one loan as P&I as I like the forced saving aspect as well as being able to make extra larger repayments.
Although I also use offsets its good to pay down debt and every 5-7 years pay out smaller investment loans as well.

 

Is that by your choice or banks?

One way to sort of force equity I suppose by paying off your principal

 

I try to treat my finances as a business as much as possible.
Focusing on constantly increasing income, while also managing expenses.
My 'budget' doesnt drill down into the fine details of costs. I just have a monthly 'spend' amount, and out of that comes everything we need/want. Some months we are over, some months we are under, but as an average across the year we are pretty close.

A budget allows me to plan for the year/s ahead to know what I need to set aside so that I can hit my investment targets.

But then Im anally retentive.

We re-invest somewhere around 50-60% of total income.
The other 40-50% covers interest (out biggest expense), living, travel, fun, etc.

However, we have a fairly unique living arrangement whereby all of our costs are covered by our employers - and both of us are working.

Blacky

 

The bank's choice. I prefer it to bankruptcy and having to sell my comfortable PPOR home.
See other thread about losing money*

 

You'd be surprised how much difference it might make over time. For eg, if you pay everything on your CC, and living expenses are $6k/month it does make a difference as those funds are sitting in the offset the whole month, not just for a couple days before you spend it. It all helps.

Most banks let you have multiple offsets, but you'll often have to pay a fee for them. For eg, CBA lets you have unlimited under package, where ANZ allow one free.

 

Budgeting allows you to compare where you are with where you want to be, and make adjustments accordingly. Regardless of whether you end up spending less, spending smarter or earning more, it turns the guesswork most people operate with into informed decisions.

 

Mortgage and car loan Comes out of account my pay goes into,

X amount transferred for. discretionary spending on a weekly basis. To a separate account

Everything else. Is bought on credit and paid at end of each month ,

And any savings left over from that are transferred to offset account on my mortgage

And then just hope I keep getting paid weekly and don't have to withdraw anything from offset. As its a pain in the ass for me to do

I do have a budget. That has all bills etc so I know where I'm at for the whole year unless something pops up

 

my current living expenses is around slightly less than 1-1.2k a month inc food, transport (i walk to work), rates (averaged out per month) electrical, gas, water etc. i drive maybe once or twice a forthnight. i don't spend a lot on fixed costs and pay everything on my CC which is interest free on purchasese till next year.