I know it sounds boring, but the very first step in developing a financial plan is working out your budget.  How much exactly are you spending? How much money is coming in and out of your household?  Are you spending more than you earn?

Most people will know instinctively if there is a problem with their budget but won’t admit it until credit cards and debts are out of control; only then do they stop and evaluate the situation.  Many people look at their circumstances and think… “We earn x amount of dollars and think we spend x amount of dollars, yet we have no savings or investments – where on earth is all of our money going?”

Doing a comprehensive budget can help prompt you to make changes—whether it be consolidating your debts to make them more manageable, making sure you and your family are adequately protected if the worse was to happen,  or simply making the decision to start a savings plan.

Money Smart  has a great budget calculator that is available in an online version and an excel version that you can download and continue to keep track of.   It has multiple categories, so you can easily establish exactly where your money is going.  Once you have completed each category, it will show you how much you have left (or how little!)

It is not about sitting down and playing the blame game because Partner 1 spends too much at the hair dresser and Partner 2 has a dozen beers at the footy.  It’s about assessing your financial position and making a decision – to bury your head in the sand or act?

Now enough reading– it’s time to take action! Grab all those old bills and bank account statements and hop to it!

By Income Solutions Financial Planning

Please note the advice in this article is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.