Thursday, 7 February 2013

A month of frugality: Sort your cash flow

Image from here
Running a household is expensive. While our income usually stays pretty fixed, the outgoings ebb and flow throughout the year. Right now we are up to our eyeballs in start-of-school year expenses, but later on it will be all about the car for us.

It is important that you have an understanding of how your money is spent throughout the year and when the 'big bills' are coming in so you can sort your cash flow.

I am not a lover of budgets. I once spent a lot of time going through all of our bills for a year, tallied our daily spend for a month and worked out a budget. I have never tracked our incomings or outgoings again, but this did help me to work out how much money we essentially could spend on groceries, presents and other variable expenses, and how much we can save. I have stuck to the grocery budget and savings plan. I wing everything else.

Things I do to improve cash flow:

  1. Review insurance premiums when they are due -shop around, speak to your current insurer about a better deal. It is possibly the most boring thing you will ever do, but it is worth it.
  2. Review mobile phone, phone and internet contracts when they are due - it is the most time-consuming thing but, again, worth it because it can save you a lot. If you are happy with your current provider, pretend that you aren't and ask for a discount! It works.
  3. Review savings accounts/term deposit interest rates - it is sometimes hard to work out when to make the switch, but as a basic guide, look for the highest interest that pays you the most frequently ie. monthly is better than three-monthly; calculated daily is best.
  4. Pay off credit cards in full (better still, don't use them!) - once you start paying interest or other charges, things get out of hand.
  5. Pay bills (including your savings) on the first day of the pay-cycle - at least you know how much you have 'left' to play with.
  6. Shop online - no impulse buying, and no embarrassment if you blow the budget and have to put something back! If you prefer to shop at the store, take cash with you.
  7. Magazine subscriptions - buy yourself a present at Christmas rather than each month at the newsagent. Better still? Read online.

And when things get desperate (and they sometimes do), try one of the money challenges:
40 Day no-shopping spree
Declutter and sell your stuff
$21 challenge
52 Week Money Challenge
Grocery Saving Challenge
No spend week

How do you manage your household finances? Do you save each week? Ever done a money challenge? Link us to it in the comments.

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Claire Hewitt said...

I tired the $21 challenge, we had no chance of making it but for a month we ate out of the freezer and pantry. It was amazing to see what was back in the depths of those things. I spent about 75 a week on fruit/veg/bread etc, but that was still 200 a week less than usual.

meegan said...

I am loving your 'Month Of' series! This month of frugality is hitting home right now and I love reading your take on things :)

Maxabella said...

You've always been the most clever budgeter I know. This month is such a good one. x

ANB said...

We figured out how much money we need for regular bills (food, utilities etc) and that amount goes into one account each fortnight. We also each get a certain amount of "play" money each fortnight into our personal accounts (for meals out, gifts, booze, whatever else). The rest goes into the mortgage. It works most of the time.

ANB said...

Oh and for anyone who is on a budget but would like a treat, there's a giveaway on at my blog this week!

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