Avoiding the Christmas rush to spend too much with a budget

Plan a present budget this Christmas

With Christmas just a few weeks away, the pressure to spend is high.

This is an opportune time to look at your personal cash budgets so that the credit card balances do not mount up. Creating a personal budget gives greater control over personal expenditure and lets you determine where savings could be made.

We spend a lot of time looking at farming business operations and financial management but sometimes the personal cash position is overlooked. This process can be particularly useful for farmers on a wage or salary. The payment is fixed so it is important to look at where the money is going.

The process starts with working out your personal income. Start with salary/wages for you and your partner, and there may also be drawings from the farm. Then factor in other sources of income like interest/dividends from investments. It is often easier to think of income and expenses as per week or per fortnight or per month amounts, then multiply out for the number of weeks.

Second step is looking at expenses. Try and track down a template which itemises the general monthly expenditure items like insurance, groceries, petrol/car expenses.

It might be useful to use past bank statements to estimate monthly spending, change the categories of expenses to fit with your own lifestyle and don't under estimate the spend on entertainment or leisure if records are hard to find. The more financial records you have the better, then you are less likely to forget something.

Once you have a good template prepared you can then calculate a cash surplus or deficit. This is a valuable step towards setting goals or making adjustments. From here you can set a savings target, how much would you need to save each week, month or year to reach this target? Decide on an amount or percentages of your income you can save each pay to improve your financial position. It may be easier to put the savings into a separate account. This way you can save to use for a long-term goal such as children's education, or an off-farm summer holiday. Make a date to review the budget position in six months' time.

It does take discipline to save over a long period of time. Set realistic goals and watch your money grow. Saving is easier if you have some clear and motivating goals, and it can be a very rewarding process.

For advice on managing your businesses budget, cash flow or forecasting, contact the Crowe Horwath team on 06 858-5540.

This information is general and readers should seek specialist advice before making financial decisions.

Amy Hamilton, Senior Manager and Agri Specialist, Crowe Horwath Waipukurau