Budgeting and saving Money

A budget is a plan allocating a sum of money for a specific purpose. Budgets can be determined for any time period but most household budgets are worked on a monthly basis. Budgeting helps people plan their day to day spending and it puts a stop on impulse buying and overspending. Budgeting puts a savings plan in place to allow someone to save for particular goals such as education, travel, car, home or retirement.

A few Tips On How To Budget Household Spending

• Determine monthly income and minus all expenses. A budget planner or budgeting software can help the budgeter work out their monthly spending and what money remains at the end of each month.
• Some Banks offer RSP (Regular Savings Plan) so that the customer can deposit funds directly into a higher interest earning account. The periodical withdrawal should be at least 10% of income.
• Spending restraint - if an item is not affordable it should not be purchased
• Avoid impulse purchases
• Manage credit cards efficiently and keep the credit limit low. Pay the closing balance at the end of each month.
• Use an easy access transaction account that has debit card access. Overdrawing bank fees can be avoided by reviewing account balances before spending, therefore keeping track of money in an account. Using a debit card instead of a credit card can reduce the amount of times a credit card is used.
• Save pay rises, bonuses, gift money and tax refunds instead of spending them.

Budgeting - Children

Teaching children to save from a young age helps develop good savings habits for the future. This may be as simple as giving a child an allowance, a money box or setting up a regular savings plan on their behalf. Many financial institutions have fee free accounts for children in order to help them achieve their goals. Strong financial values and saving practices help children achieve this in their later years.

Budgeting - New Job Starters

It is important that youths develop good savings skills and manage their spending habits for their future. Even though many youths don't have many expenses at such a young age they still like to spend their money on the latest fashion and gadgets. It is important that youths learn to budget their income from a young age. This can be achieved by putting 10% of their income in a high interest earning account that is not easily accessible. Putting money aside (e.g. in a superannuation account, retirement plans or pension schemes) during ones working life will ensure that there will be enough funds for use in retirement.

Budgeting - Young Couples

Young couples need to develop good savings habits early on in their relationship in order to achieve their financial goals as a couple for the future. This can be achieved by putting 10% of their income in a high interest earning account that is not easily accessible. Contributing to superannuation, retirement plans or pension schemes will ensure comfortable living in retirement years. A budget can help young couples determine how much they have left to spend at the end of each month once their expenses have been taken out. Young people fail to save when they allow their short term needs (e.g. buying clothes) override their future goals (e.g. saving for a deposit on a home).

Budgeting - Newlywed Couples

Some married couples like maintaining control of their own separate accounts and don't see the relevance in joining finances after their wedding . Other couples see joint accounts as a new beginning and want all their finances joined which shows a sense of commitment.

Goal setting helps couples keep on track and focused on budgeting, it also helps avoid the temptation to spend beyond ones means. Goal setting should be specific and have a dealine. Goals can be divided into three groups: Short term goals, medium term goals and long term goals.

Short term goals involve such things as having enough money to put a deposit on a motor vehicle, purchasing new furniture, or paying for a vacation.

Medium term goals involve greater sums of money to pay for such items as a homeloan deposit down, home renovations or education expenses.

Long term goals include building assets to pay for a young child's future education and saving towards retirement years.

Advantages Of Joint Accounts

• Joint accounts mean less accounts which in turn means less monthly account keeping fees
• Joint accounts save time because there are less accounts to keep track of
• Joint accounts enable partners to check and manage each others spending
• Joint accounts increase savings faster depending on the total balance v's interest requirements of the account

Senior Citizens

For seniors and retirees, a reliable income can present a major issue. Once employment is ceased, income is usually derived from a government pension, superannuation plan, pension scheme or retirement plan payout. As senior citizens are no longer working their income may drop considerably. Estate planning and finding tax effective strategies is vital. Financial planners can usually assist in retirement planning, investment strategies and annuities.

What Are Annuities?

Annuities are a lump sum amount of personal savings or superannuation (pension schemes or retirement plan) which provides the retiree with a regular guaranteed income over specified term. This can be short term 1-5yrs or long term 6-25yrs.

What Is An Allocated Pension?

An allocated pension is a source retirement income arranged through a financial planner or financial adviser. It allows an individual to draw a pension from a lump sum investment that is earning a return, and therefore growing at the same time.