With all the talk about the Budget, it's a great time to think about budgeting for you and members in your household.
If having a budget conjures up thoughts of going without and missing out on fun, you are starting on the wrong track. There is no downside to having a
budget. Think about it not as something restrictive but as a tool to help you reach your dreams.
The key to creating and maintaining a budget that really works is planning ahead. Plan how you are going to spend what money you have - it's better to tell your money where to go instead of wondering where it went.
The most common mistake people make is thinking budgeting is getting a bill and then figuring out how to pay it from the next pay.
This is not budgeting. This is living day-to-day financially and creates a lot of stress.
What often happens is bills for the car insurance, vehicle licensing, warrant of fitness and resulting repairs from the WOF inspection all arrive within a particular pay period. When this happens, there may not be enough money to pay bills, the rent or mortgage, and continue to feed yourself andyour family.
You are now faced with choices you wouldn't have had to make if you had been budgeting by putting money aside every week for expenses you know are coming up.
Budgeting takes account of present and future needs and wants, both planned and unplanned. An effective budget covers now-money, soon-money, and wrinkly-money.
Now-money is needed this week for food, petrol, rent etc; soon-money is set aside in a short-term savings account to cover expenses; and wrinkly-money is for long-term savings such as saving for a house or retirement.
Sylvia Bowden is the author of How To Stop Your Kids Going Broke, available from www.silbo.co.nz She has also written the New Zealand Household Budget Kit, available through bookshops and her website.
