SELF CARE FOR PARENTS
The Value of a Budget
We began to keep track of our regular bills: electricity, water rates, council rates, telephone and internet, house insurance, car insurances, car registrations, car repairs, health insurance, etc. And I was surprised at how much they added up to over the year. We estimated and allocated a yearly amount to cover all our bills. We also began to save a 'just in case' account, which was money there that we didn't touch unless something big happened.
It may be sobering if you add up all of your bills. Like me, you may find that there's not as much left over as you hoped.
But rather than putting my head in the sand as I'd previously done, I looked at ways of cutting costs or expanding my income.
Surprisingly, even with examination, many of our utility bills and recurrent bills didn't change much. For example, I wasn't prepared to have lesser health coverage, so that cost remained, however I did change funds to one that gave better returns on expenses paid.
I did however change mobile phone providers reducing our costs to a third. By investigating my options I received more for less, and it was especially worthwhile because in our family, mobile phone costs were multiplied by four.
And I found there were some other areas in our life that were able to be adjusted.
We drove older cars rather than new cars. (If we'd chosen newer cars, we would have been working just to keep the cars on the road. At one point, while both boys were in Uni, we were paying for repairs, insurances, registrations for four cars.)
Something simple we did was we went to the same mechanic over many years that I knew was trustworthy. By having a positive relationship with him that made a financial difference to us. He helped us plan the changing over of vehicles before they became unsafe to drive and we ensured he regularly serviced our cars so that we had less repairs than we otherwise would have.
As it turned out, the guy couldn't have done us a bigger favour. We began to pay double payments whenever we could and we tripled the equity in our home within the five years we owned it. We wanted to be rid of the debt as soon as possible.
One simple thing that we did with our second mortgage was we paid our mortgage fortnightly, rather than monthly. That meant we made one month's extra payment over the year. And by doing so, it would have saved us over ten years on repayments. So instead of paying it off over twenty five years, it would have taken us fourteen and a half.
And I developed more confidence in asking for the best deal possible. I managed to get a 1% lower interest rate because I knew it existed and I asked for it.
DISCLAIMER: N.B. The financial information on Best Parenting Advice.com is what I did and what worked for me. It may not however work for you in your financial situation. For financial advice specific to you and your situation you need to seek advice from a financial advisor or accountant.
I found for my husband to try to get me to do a budget, was like him trying to baptize a cat. I wasn't going in.
However once he got me on board, and I recorded our expenses, our financial lives improved markedly.
As a very young woman I was inclined to spend what I earned and as a result only had meager savings. But when we recorded our spending we not only began to make headway with our mortgage we developed savings. And because we recorded it, we could see we were making real progress.
And an unexpected positive side effect was, I reduced my impulsive spending, because I had to record it.
I examined every area of our expenditure over the year, in addition to those already mentioned above: Petrol, food, entertainment, eating out, education costs, hairdresser, cosmetics, shoes and clothing, house expenditure, home repairs or renovations, gifts, donations, superannuation, furniture and appliances, medical bills, medications, sports, child interest fees, pets, tolls, public transport, holidays, gym memberships, celebrations and other miscellaneous costs.
N.B. There is a great budgeting tool on the ASIC site.
Go to :
I realized if my husband and I dropped in for a morning coffees each, that cost between $60 and $70 a week, totalling well over $3000 a year.
If we ate our lunches out at just $10 a day each that added another $100 a week to our costs. Again that added up to around $5000 a year.
And if we ate out, or had takeaway once a week at the cost of just $50 a week, that added up to another $2500 a year. When I added just those things together, I saw I was spending a month's worth of holidays a year on some form of takeaway.
By adjusting our takeaway habits, we created a financial buffer. that otherwise wouldn't have existed.
Like me you may find, there are some things you aren't willing to compromise on. Some people can't survive without their morning coffee. And I'm not saying don't have it. Just know what it's actually costing you and plan around it.
But I think the thing that made the greatest difference to our financial lives was that by doing a budget, we developed a greater incentive to pay down our mortgage.
I can tell you a true and sobering story. When we bought our first home we took out a mortgage. The bank manager said because we were new mortgage holders we didn't need to pay our first monthly payment. We thought, what a great bank. However six months later when we got our first statement that first month's payment had been added to the beginning of our loan. That meant that we owed more than we borrowed, and our repayments weren't even covering our loan.
For our latest mortgage we took out a home equity loan. We found this to be a great facility for us because we exercised discipline.
Any money we earned came directly off our mortgage, and it was calculated daily. But beware, a loan like this can also be a disaster for those who don't exercise discipline, as some keep redrawing funds against their house, and they end up still owing the original amount twenty years later on.
Yet if they had a budget, and stuck to it, they would know they were living beyond their means before it turned out to be too late to do much about it.
For some more Money Saving ideas go to the links below:
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