Plan for a better year

Set up a savings account for next Christmas. Photo / Thinkstock

Next christmas might be the last thing on your mind but budgeting experts say now is the time to start planning. It is also the perfect time to get your budget in place to make 2011 the year of achieving financial goals.

New Zealand Federation of Family Budgeting Services chief executive Raewyn Fox says sorting out finances only takes a little time and some organisation.

"At this time of year, if people are feeling the pinch and they think, 'Gosh, Christmas is leaving me a bit short,' add up how much it cost and set up a savings account or join a supermarket Christmas club for this year."

She says supermarket Christmas clubs offer special deals in the run-up to the festive season so members can make their money go further.

You should also add up what you've spent on Christmas presents and start putting a little aside throughout the year.

Setting up a realistic, comprehensive financial plan will save you stress and may even throw up opportunities for you to earn more.

"The first thing is to do a really good comprehensive forward plan of everything you're likely to spend over the next 12 months."

Her organisation's website offers a budget worksheet, which prompts on expenses people might not think of such as "school costs and clothing and other longer-term things that you forget about".

When drawing up a budget, it's important to be entirely honest about the little bits of personal spending that add up quickly.

Fox suggests keeping all receipts for a period of time to see where the money is going.

Once you've done a plan, it's time to compare it with your earnings. If it's looking short, make cuts or savings. But remember: if a budget is too restrictive, no one will stick to it.

"A budget should not be about making you do without, it's about using your money more efficiently," Fox says.

"Look at your petrol, your car parking. Should you be car-pooling? Things like monthly train tickets [instead of buying as you go] can save you about 25 per cent on your transport costs."

Grocery shopping online can also save you money by helping you stick to your budget (the websites keep a running total of the content of your shopping basket), and it removes the temptation of buying extras that are marketed cleverly in supermarket aisles.

There may also be ways to increase your earnings.

"Look at whether you have any income-earning potential, things you can sell. A lot of people might look at the size of their house - have they got a spare room for a boarder or a student?

"Look at your assets and whether they can earn anything from you, off your talents. A lot of people share skills such as, 'I will babysit for you if you cut my lawn'."

But it is important to keep good records of your spending during the year and check back on your budget regularly to see how it is going.

Fox's organisation has a cash-flow tool on its website which allows people to log their income and expected expenses, such as power and phone bills, along a timeline.

"That shows when all the peaks and troughs are for spending over the year. Then, when you get paid you pop it in and it might show you that the $100 in your bank needs to stay there because your car needs a service soon."

While getting all the "bits and pieces" together might take a little time, once a habit is formed taking care of the finances becomes simple, Fox says.

"Once you get the hang of it you're away."

For more budgeting advice or for online tools visit www.familybudgeting.org.nz