How to save money, budgeting.

Income

First you need to work out and write down your net income. You can find your net income on your payslips or Centrelink statements. You could also check your bank statements or tax return. Include any new income that you may expect.

You will need to distinguish between:

• Gross Income - your income before tax and other deductions are taken out
• Net income - your gross income minus tax and other deductions such as superannuation. Net Income is what you actually receive.

Tip: Your income is all regular money you receive including child support and the family tax benefit.

Expenses

Next you need to work out and write down all of your expenses. Most important are basic living expenses such as rent, utilities, clothing, food and transport. You also need to include other necessities such as insurance and medical expenses. Leave a gap or use headings so you can easily see which are your living or essential expenses and then work out and write down luxury or easily reduced expenses such as gifts, regular trips to the movies, shopping, takeaway or holidays.

Caculations

Now that you have written down your income and expenses:

1. Add totals for each.
2. Deduct living and essential expenses from your income. The amount that is left is called your disposable income.
3. Deduct your luxuries and other non-essential expenses from your disposable income.
4. The amount (positive or negative) that is left after this is your balance and can tell you a lot about your financial situation.

Congratulations! You now have a record of your income and spending. Now you can see where your money comes from and more importantly where it goes!