While Australians enjoy some of the most liveable cities in the world, the cost of living is high. Planning ahead is important for financial security. Many families use home budgeting to manage their finances. There are some effective tools and systems available to help achieve this.
The family home, the birth of a child, schooling and retirement - living expenses are part of life. Some people can get into difficulties when their expenses are greater than their income. This can lead to complications with financial institutions, credit card debt and even bankruptcy. Suzan Campbell is Senior Manager of Financial Literacy at ASIC [Australian Securities and Investment Commission]. She says, budgeting starts by setting realistic financial goals.
"The best way to start saving is by budgeting and knowing where your money is going.''
"So those goals you are budgeting for, they can come in lot of forms, maybe it is a deposit on a home, maybe it is to pay off a student loan or maybe it is for a big holiday for you and your family. But, whatever it is achieving these big financial goals requires saving and budgeting. Now the best way to start saving is by budgeting and knowing where your money is going.''
Rising property prices can make it difficult to buy a home. Suzan Campbell says migrants often find it hard to save while they're supporting families in their homeland. She says it's important to save a proportion of income to put towards buying a home.
"It's good to set a goal for a certain time frame."
"It is a challenge to save for big ticket items like a deposit on a home and with all the other obligations that people have in their lives including sending money back to family overseas. It's good to set a goal for a certain time frame. For example, if you save just $30 a week more than you currently are, in a year's time you will have saved over $1500."
Many household bills relate to children's expenses. Suzan Campbell says, the budget planner on ASIC's MoneySmart website is a useful tool for managing expenses, such as school excursions and uniforms.
"The most important thing for all of these expenses is to find out the information upfront."
"The most important thing is to do a budget and ASIC's Money Smart has a budget planner where you can capture or estimate how much you think these costs are and look at how it will affect your bottom line. I think the most important thing for all of these expenses is to find out the information upfront."
She says it's good to have different bank accounts for different goals or expenses.
"Families can also look things like having separate bank accounts, savings account with higher interest rates where they can put those savings in and they could you know have them set up for specific goals like the kids' education or buying a home or an overseas holiday, so that they actually isolate that money out of their general transaction accounts and they don't dip into that when they really want to keep that savings."
"It is good to have some money tucked away for contingencies."
Suzan Campbell recommends keeping money aside for unforseen events.
"I will also add that it is good to have some money tucked away for contingencies. Really it is a matter for people to look at the sorts of guidance that they can get, they can get through ASIC's MoneySmart and work out what works best for them. But also in a budget sense, you would actually be budgeting for you know contributing to your contingency fund or your school fees fund or your buying a home fund you would actually put that as a line item for your contributions."
She says singles and families could easily plan ahead for retirement by using a retirement planner and superannuation calculator.
"It is important with any retirement or superannuation planning to start as early as possible."
"Both of which will help people have a look at their situation and what it will give a forward projection to their position is likely to be at a future date, that being said, it is important with any retirement or superannuation planning to start as early as possible."
She advises singles to limit their entertainment expenses, and families to align their financial goals.
"Financial planning tools are available in several languages to assist the newly arrived, who might find it difficult to budget."
"The most important thing for singles is to be disciplined in recording their spending and not exceeding their budget for certain things like for example entertainment. For families and couples the most important thing is to make sure that you are all on the same page about your goals and that you are consistent and keep to the plan for your savings across whatever that may be, whether it's for savings for the kids' education, savings for a home, or for an overseas holiday."
She says financial planning tools are available in several languages to assist the newly arrived, who might find it difficult to budget.
"Some of our best tools for budgeting and tracking spending are our Budget Planner, ASIC's Track My Spend App, and ASIC's Savings Goals Calculator. We also have a section on money management which was developed for people who had newly arrived in Australia and we have that available in 16 languages. So that can also assist people for whom English is not their first language."
ASIC's MoneySmart has publications, audio and video recordings in several languages, including Arabic, Dari, Dinka and Swahili.
ASIC can also assist in finding free financial counselling.