Juggling household expenses and managing finances effectively can be challenging for many carers. It can be easy to feel overwhelmed when bills come in and challenging to feel in control. While there is no magic ‘financial’ pill, there are a number of steps you can take to feel more in control.
Step One: Work out your Budget
A good budget is one that is accurate and realistic. There is no point setting a budget which means you are spending twice the money you have coming in – and equally – no point setting a budget which you cannot possibly stick too. To put together a realistic budget:
1. Work out your income, including your pay and any other sources of income or allowances. Use payslips, Centrelink statements or your bank statements to assist.
2. Track your expenses. Include fixed expenses like rent or mortgage and variable ones including bills, groceries, utilities, entertainment, etc. List your daily expenses for a month. Include everything you spend money on no matter how small the amount. Using your credit card and bank statements, as well as receipts and shopping dockets, for the last three months if possible, will give you a good guide.
3. Identify your debts. Work out total amounts and note the monthly payments on any home, car or personal loans, credit and store cards, etc.
4. Compare your income against your expenses. From this, you can see where your money is going and look for opportunities to reduce unnecessary spending.
There are lots of helpful budgeting apps out there including Pocketbook, Goodbudget, and WiseList App. The Money Smart website also has lots of useful resources and tools.
Step Two: Reduce Unnecessary Spending
Once you are clear about where your money is going, you can look to identify areas of wastage. Some ideas include:
• Do you currently use cards, which attract high fees?
• Are you spending more than you need too on things like petrol (identify cheap days), toilet paper (often comes on special, which means that you can buy in bulk where possible), phone plans, insurance etc?
• Can you save on your electricity or water bills? Do you leave lights on in rooms that are unused, leave appliances on standby overnight? You can buy timers for power adapters, which means that you can set them to switch off when the family is asleep. With electricity so expensive, this can make a significant difference in your power bills?
• How often do you buy things like a takeaway coffee? Switching from a regular latte to a small latte can say as much as $1.50/ day, which doesn’t sound like much, but over a year will save you $500. Even better – buy a Keep Cup and make your own coffee at home or at work and avoid buying one altogether.
• Reduce the amount you order out or buy take-out. Australians spend 34% of their food budget on eating out – $1600/ year on average.
• Shop once/ week at one shop only. This reduces temptation spending and if you also cook in bulk, could save you significant time, which you can then invest in your health and wellbeing. Spend a day each week (or month) cooking your meals and freezing them. Australians throw away 20% of the food they buy. Cooking in bulk reduces this wastage, is usually cheaper, saves time, and is usually healthier.
• Take your own lunch to work. On average, Australians spend $12/ day on lunch, which is almost $3000/ year.
• Recognise impulse buying and seek to reduce it. Spending $10 3 x week can add up to $1560/ year.
• Buy second hand. It’s better for the environment and your wallet.
• Review all of your subscription services and if you have more than one, reduce. Having Netflix, Spotify, Stan, Disney+ for example really adds up.
Step Three: Start saving
• Set up an automatic deduction from your bank account to a savings account and remember that over time, small regular contributions add up.
• Consider ‘Rounding Up’ Programs, which automatically ‘round-up’ the price of your purchases to the nearest dollar. Depending on the program you use, the difference is then put into a savings account or a micro-investment scheme. While there may be a small monthly charge for use, these small deposits can really add up over time.
• Sell your pre-loved items. Do a ‘spring clean’ at home and identify those items which you no longer use or need. You can advertise them on an online marketplace such as a local Facebook group or Gumtree.
The Australian Government ‘Moneysmart’ website provides further information on financial management and planning, service providers, tools and resources. www.moneysmart.gov.au/
Importantly – Taking small actions really add up over time, and oftentimes, lots of small changes rather than a single grand gesture is what makes the biggest difference. Also, remember that many of us experience financial difficulties at some point during our lives. The trick is to respond quickly and get help. Don’t avoid it and hope it will go away. There are lots of services, which offer financial counselling – Centrelink or the Money Smart website will be able to point you in the right direction to access this kind of support.