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How to set up a spending plan

5 steps to get your family budget under control   

If you’re finding it tough to meet your monthly bills and mortgage payments, you’re not alone. 

The figures show that 1 in 7 Australian households spends more than it earns – and it’s a problem that affects people from all parts of society.

But just because this issue is widespread, doesn’t mean it always has to affect you. The great news is that there are things you can do to firstly understand your spending, and then make the small changes you need to make a big difference to your financial future.


You might think that creating a family budget is a difficult task – particularly if you haven’t been working with one before. Yet it's a task you can accomplish one bite at a time.

Here are the five steps you can take to get your spending and budgeting under control.

Step 1) Account for all your fixed bills

The foundation of any financial strategy is getting the complete picture of where your money is currently going.

That’s why your first step in creating an accurate budget should be to sit down and go through your monthly and quarterly bills. This includes things like:

  • Mortgage payments
  • Power bills (remember both electricity and gas)
  • Car rego
  • Car insurance
  • Home insurance
  • Health insurance
  • Mobiles
  • Rates
  • Personal loans
  • Childcare
  • School fees
  • Subscriptions and memberships such as gyms, Foxtel, Netflix, etc 

Take the first step towards your ideal future

When you look at the list, it’s easy to understand how fixed bills can add up to about $20-$30 thousand dollars every year – and that’s without including mortgage payments! 

Add in your mortgage and personal loan repayments, and most families are looking at around $80,000 or more of expenses, each and every year.


2) Investigate all your “lifestyle expenses”

If you’re like most people, you might not realise exactly how much you’re spending each week on “lifestyle expenses”. This category includes all the little things you spend money on, that – unlike fixed bills – can vary from week to week and month to month. 

Because of the variable nature of these expenses, this step can take some time. Yet it’s absolutely worth doing. It can help to look at your last 3-4 months of credit card bills to get an accurate picture. Lifestyle expenses include things like:

  • Groceries
  • Dining out/takeaway meals
  • Lunches
  • Coffees
  • Alcohol
  • Movies
  • Petrol
  • Gifts (including Christmas, birthdays, anniversaries etc)
  • Holidays
  • ...and whatever other expenses are personal to your situation.

The results of your investigation can be confronting. It’s incredible how much 2 takeaway coffees a day, 5 days a week can add up to over 12 months! Yet there’s absolutely no point in closing your eyes and pretending this spending isn’t happening. 

So take the time to get a true picture of your lifestyle expenses. Your future self will thank you. 

3) Compare your expenses against your income

Once you have a good grasp of all your expenses, it’s time to compare your spending against the money coming in, including your salary and any other income. This can be a sobering experience.

Many people discover that they’re actually in a negative cash flow situation – meaning they’re regularly spending more than they earn.

If this is the case with you, take heart. You’ve already taken the first steps towards fixing your negative cash flow, and getting your spending habits under control.


4) Look at where you can make savings

The next step is to look at where you might be able to reduce your spending. Do you really need to buy lunch every day at work? Or could you perhaps bring lunch from home and save yourself thousands of dollars over a year?

An important part of finding savings is to look at the “big ticket” items you spend money on. For example, how long is it since you’ve reviewed your home & contents insurance? Could you find a better deal with another provider?

Do you really need that $120/month internet package, or is the $60/month plan adequate for your needs?

Are you paying your energy bills via direct debit, and accessing the discounts on offer?

Do you have an offset account in place for your mortgage? Are you making repayments every week or fortnight, instead of every month?

For most of these items, a quick phone call could save you thousands of dollars each year. But if you’re still finding it difficult to get moving, having help from a financial planner can be very valuable.

A professional financial planner can act as your “coach”, making suggestions and holding you accountable for getting things done in the “savings” phase.

5) Create a spending plan to control your outgoings

Once you have identified where your money is going you’ll have the tools you need to put a spending plan in place, and keep your budget under control.

Instead of using a credit card to pay for all your expenses – with very little accountability – try arranging for your salary to be paid directly into your mortgage offset account.

Then, arrange for a specific budgeted amount to be drawn down onto a debit card each month. Think of this amount as your “payday”!

You’ll then know that this (for argument’s sake) $200 a week is all you have to play with for all your lifestyle expenses – coffees, lunches, drinks with friends, the lot. Once your debit card is empty, you’ll have nothing more to spend until your next monthly “payday” drawdown.

There’s no doubt this method can take a little getting used to! To begin with you might feel like you simply don’t have enough money – particularly if your spending was out of control previously.

Yet in about 3 to 6 months’ time, you’ll be fully up-to-speed with your spending plan, and enjoying the feeling of knowing your finances are in much better shape. 

Just so long as you get started today.

Meeting with a HM financial adviser

Get help with your spending plan from HM

If you’d like to know more about how you can understand your spending – and get it under control – the team of financial advisers at Henderson Matusch can help. For a complimentary no-obligation chat, call us on 07 3229 3688 or use the simple contact form here.

Topics: goal setting, budgeting

Posted by Henderson Matusch on Nov 27, 2018 4:16:14 PM
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