Wondering where your cash has gone? You may need the discipline of a household budget, reports Christine Long.
If your money always seems to do a disappearing act, setting a budget can help, but first you need a good idea of how you are actually spending your money.
Narelle Brown, a co-ordinator at the CCAS Ryde-Eastwood Financial Counselling Service, encourages people to start by tracking their spending for a month.
"When they do they start to see the bigger picture," she says. "Then they can make decisions about their situation."
Many websites and software packages have spreadsheets where you can record your income and expenditure, and the credit union movement publishes a free guide to budgeting called Budgeting: Making It Easy.
Using these resources can act as a memory jog when you are preparing your first budget.
"Usually most people are very aware of electricity, gas and petrol, but they are not so good at remembering [car] registration and insurance," says Brown.
Once you have a snapshot of your spending habits, the next step is to bring them into line with your priorities.
Andrew Heaven, a principal of WealthPartners Financial Solutions, says one way to gauge an item's importance is to look at how many hours of work it would take to pay for it. Someone earning $25 an hour after tax who wants to buy a pair of shoes that cost $200 may think twice if they realise they have to work for eight hours to pay for them, he suggests.
It is important to analyse why you are spending money and whether there are alternatives, particularly if you have trouble with lifestyle spending, says Brown.
"Ask yourself: if I didn't spend money at the gym, what could I do? Could I jog around the block or invest in a cheap treadmill?"
Your budget should also include setting aside some money for your financial goals, perhaps by making a regular transfer into a savings account or a managed fund. Financial planners also generally recommend having three months salary ready for emergencies.
When you have established your budget, work out some rules to help you stick to it.
Allan Moore, a 58-year-old council worker from Sydney's Leichhardt, says he has saved about $121,000 in interest over the years by paying extra on his home loan repayments.
"If a payment's $20, I'll pay $40," he says.
But don't be too hard on yourself. If you like to eat out, limit it to one restaurant meal a week rather than cutting it out altogether.
"It's about amending the way people live their lives rather than making wholesale changes," says Heaven. If you do have a blowout, try to identify the cause, he suggests.
"Is it something that occurs at this time every year, or is it a genuine emergency?"
Finally, the credit union guide suggests reviewing your budget every three months. But don't see it as a killjoy. As it says: "A successful budget can actually free up funds and help make the pleasures in life a lot easier to attain."
Setting the budget
With three young children and a mortgage, Neil and Jenny Pierson are constantly looking for new ways to make their dollars go further.
Recently the Sydney couple have raised cash by volunteering to taste potato chips for market researchers and entertaining Japanese students in their home.
As a fan of Robert Kiyosaki's books such as Rich Dad, Poor Dad, Neil, 35, says he is always on the lookout for creative ways to give their income a boost.
"We are learning to ask 'how can we afford it?' rather than just saying 'we can afford it,' " he says.
But sticking to their budget also means being vigilant about how they spend money.
Apart from limiting expenditure on clothes and eating out, they pay off their credit card in full each month and only run one car.
Credit card reward points are used to fund short breaks, and they recently managed a longer break by staying in a relative's house in the Blue Mountains, west of Sydney, while they were holidaying elsewhere.
It can be difficult to predict the cash flow needed for unexpected expenses, but they plan for months like November when they are hit by the triple whammy of car insurance, home insurance and school fees.
They also make a point of reviewing their budget every year and spending is tracked on a monthly basis on an Excel spreadsheet.
While Pierson admits this has been a particularly stretching year for their finances, they have still been able to make it work.
"For the past two years our budgeted expenses have actually been more than our income. By setting a realistic budget it forced us to look for creative ways of earning extra income to meet the shortfall, so we have actually ended up ahead. Budgeting helps keeps us on track."
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