Ask Michelle: It’s time to do a budget. Here’s where to start

Most of us have recently seen our dining and impulse window-shopping expenses drop dramatically. But have you taken the time to have a good look at your household budget? This is where you start.

WITH Queenslanders’ household financial confidence seen sitting at a record low not seen for some 50 years, it’s time to raise your confidence – and savings – back up.

While stuck sitting inside, we may be saving costs as dining and impulse window-shopping isn’t much of an option, however have you thought about the impact of your household budget?

Simple security measures like separating needs from wants, avoiding credit card payment interests and setting up an emergency fund, are little things to help you save big.

“Now is a good time to do a stock take of all of your financial products to find out if there are opportunities for you to be saving money; what accounts do you have? Would you be better off with a different account or financial institution?” Heritage Bank CEO Peter Lock said.

If you’re feeling financially stressed, it’s important to focus instead on what you can control to raise your personal monetary assurance.

“Try to focus on what you can control,” Mr Lock said.

“Look at your essential costs – mortgage repayments or utilities – and your family’s general lifestyle expenses like take-out or entertainment.

“Add these up so you’ve got a good idea of your expenses and what you can potentially cut back on”.

Experts warn high-interest rates could do “long-term financial harm,” making your purchases about 20 per cent more expensive, stressing the obvious but overlooked; avoid credit card payments.

“If you find yourself a bit short on funds right now, you may look to charge expenses to your credit card to earn points and pay off later but high interest rates could do you long-term financial harm if you spend more than you can pay off quickly,” Mr Lock said.

“Avoid getting hit with extra charges that could make your purchases 20 per cent more expensive”.

Making use of resources, such as budget apps and online calculators, can also help you see where exactly your money may be slipping through cracks without you realising it.

“There are a range of online calculators on our website to help people understand and manage their money better,” Mr Lock said.

“The Budget Planner steps you through all the normal expense items, such as transport, household utilities, food, pets, internet, loans, entertainment, health care and insurance”.

Kristian Hancox and Tracey Slone with kids Izabelle Hancox, 11, Kaydence Hancox-Slone, 2, and Aaliyah Slone, 12, are using the Heritage Bank's budget planner. Picture: John Gass

Tracey Sloane alongside partner Kristian Hancox and daughters – Aaliyah, 12, Izabelle, 11, and Kaydence, 2 – has found household budgeting “a learning experience,” with online budgeting services helping her get through.

“Having three kids can be tough at times to budget so we definitely have to factor in that,” Ms Sloane said.

“Budgeting has been a massive learning experience, and I’ve found the online services have helped heaps”.

Other tips to keep your home financials as non-stressful and inexpensive as possible include knowing how you would protect yourself from income loss and doing a “ring around and compare”.

“Think about how you could protect yourself from loss of income further down the track,” Heritage Bank chief customer officer Kevin Potter said.

“If you have cover in place, review the conditions, and check what is and isn’t included to see if it still meets your needs. You can also revisit utilities like electricity and internet usage; ring around and compare, you might be surprised how much this activity will save you a year”. However, financial professionals say it doesn’t matter how much preparation and planning you do if you aren’t keeping tabs to stay on track.

“Once you have a budget, keep tabs on it to make sure you're on track, you may need to adjust your savings plan to account for unexpected changes to your income or expenses,” Mr Potter said.