Making a Budget
Making a budget seems so simple but it really is not. There are always unforeseen circumstances and the bigger the family, the more it will be. So how can one make the perfect budget? Sorry but there is no such thing. Inflation is always rising and things will cost more so a budget should be fluid. But that does not mean spending more than you earn. My wise grandfather used to say (translation into English), only stretch your legs as much as the blanket is long. To this day, whenever I update my budget, I imagine my twinkly toes getting cold!
So first rule, a budget should work for you and not the other way around.
Second rule, keep updating it. When I started at 19, I updated my budget every week until I was comfortable I had covered every expense and then some. For some people keeping a diary would help. My budget made me realize I was spending more than I was earning, so I either had to earn more or cut costs. As I was only working part time and studying full-time, working more hours was not achievable so I looked at what I can do about expenses. The following is from my diary year 2004, my first year as a student:
Rent $150
Groceries $30
Travel $20
Pocket money $50
Total expense $250/week
Income $9.50hr x 25hrs = $237.50 minus tax = $200/week.
From the above one can see I was spending outside my means. So I made a few changes. First of all the biggest expense was rent, I was living in a big room in a fancy house and everything except food was included. Since I was studying and working, I was hardly at home only coming in to sleep, shower and cook. Spare time was spent at the library studying. So I looked around for cheaper housing. I found that renting as a boarder with a family or in an existing flat with flat mates would save me $50/week. So I checked online ads, talked with other students and looked at noticeboards at supermarkets and on campus. Finally I found a small room offered by a nice couple in their house for $100/week inclusive of everything except food. Plus it had the added bonus of being 25 minutes walking distance from both work and university so I saved most weeks on travel expenses. There were compromises. The room was small, and I had to make the best use of space. Also I had to get up early to be able to walk to uni for an 8am lecture and be home late from work. But to save money I had to make it work. Furthermore, since I worked at a takeaway place I got to take leftovers home so I saved on groceries as well. I also found that if I was diligent and did most of coursework during the week in between lectures, I was able to pull an extra shift at work during the weekend and still have a day off to relax or socialize. I kept updating my budget as I made these changes over a period of a year. At the end of my first year my fortnightly budget looked like this:
Rent $200
Groceries $50
Pocket Money $50
Total $300/fortnightly
Income $10/hr. x 60hrs/fortnight = $600 minus tax = $500
Savings $200/fortnight = $5200/yr.
I know pay rate was low at that time and so were costs and one has not kept with the other but even in this day and age one can save money on a minimum income. Yes this budget is for a single person and everyone’s situation will be different.
Furthermore, during holidays I picked up holiday jobs everything from cleaning houses to working in a factory. One summer holiday I worked mornings at a factory, evenings at takeaway place and weekends at a retail store. I saved $1000/ weekly. Thus I would save enough which would enable me to pay next year’s fees, second hand books (or use the free ones in library), clothes, insurance and other emergency costs.
For entertainment, I went to free concerts, movie nights on campus and hanged with friends at their flats and shared the cost of rental DVDs. Over the 4 years of my study, my budget increased to $450 while income was $600. I had to move twice but I always found room for rent for $100/week. Travelling costs, mobile phone plan, increase in groceries and two short holidays abroad were taken. But they were all paid for by cash and I did not own a credit card during these four years. I also had savings of around $10,000.
End of 2007 I graduated with a degree and got a job paying starting rate of $19.50/hr. and after a year with my savings bought a house but that is another story.
Today as of 2016, I am renting in Auckland with flat mates and have a double room to myself close to work. I own a car and my two rental houses pretty much pay for themselves. So today my budget is:
| Auckland Budget 2016 | Fortnightly |
| Rent | $270 |
| Income insurance | $43.10 $313.10 |
| Groceries
· Meat $30 · Vegetables n fruit $30 · Supermarket staples $20 |
$80 |
| Petrol | $50 |
| Pocket money | $40 |
| Lotto | $20 |
| Mobile | $10 |
| $513.10 |
Some of you may express disbelief at surviving on such a lean budget but let me assure you it is doable, although there have been weeks where I have indulge a little too much. Let’s break it down.
Rent: The more people you live with the cheaper the accommodation as you are sharing the cost of living. I used to live in a 2 bedroom apartment but had to share a room with one other person and space was pretty tight among other things. I moved to suburbs and found a 5 bedroom house near work $135/week for a room all to myself. There are compromises but I have lived here for over 4 years and utilities are included.
Income Insurance: Say you have some savings saved up. You lose your job, it’s possible I resigned one job and it took two months of applying and interviews to find my current job. I had $4000 saved up and expenses were $500/fortnight, which means I could only survive 8 fortnights on it. Look at your savings, divide it by your budget, how many weeks can you survive?
Groceries: There are many supermarket chains and the local fruit and vege shops in NZ. Every week a different shop will have different items on sale. I usually load up my fridge with meat when on specials and save the money on next few weeks they are not. Vegetables are cheaper and easier frozen but I do buy some fresh ones for salads. I also grow a few herbs on the window stands. Other staples such as washing powder, canned or dried foods, etc. I buy in bulk so they last me many months. Good place to find specials are on flyers and online supermarket sites to decide what and where you are going to shop this week.
Petrol: Find a car with less fuel consumption, do your regular 6 monthly maintenance on it, keep tires pumped up, clear any excess junk from inside your car as they add to the weight thus more fuel consumption and look for deals on fuel and fill up. I have found keeping the car filled more than half tank seems to use less fuel. Carpool or live close to work.
Lotto: I like the odd flutter and usually chose my own numbers.
Pocket money: can get cheap haircuts from home run saloons or free ones from student trainees. $11 movie tickets per week, cheap takeaways, a top or shirt from warehouse, etc.
Mobile: $19 mobile plan monthly
We all learn from each other’s experiences so please do write about your achievements or any tips other readers can learn from.