Do you dread the arrival of the electricity and phone bills because you have no money to pay them? Or even worse, has your electricity or phone ever been cut off for non-payment of the account? Have you only got a hazy idea of whether you will be able to afford new furniture or a car next year? If you answered "Yes" to any of these questions, then you need a personal financial plan. A personal financial plan is also called a budget. Governments and businesses invariably prepare budgets each year for their operations.

Living on a "hand-to-mouth" basis is to be avoided at all costs. Many people find that keeping a bank cheque account helps them to budget their expenditure. Others find that keeping a cheque account only encourages them to spend prolifically. Beware of credit cards. You may easily find yourself overspending with these. Try to get by without obtaining personal loans. The interest that you pay on these will only decrease your standard of living. In any case, you should have at least one savings account at a bank, Building Society, Credit Society or some similar organisation. You should aim to keep a balance of at least $2,000 in this account at all times. This will cover unexpected emergencies and will also act as a buffer when paying periodic accounts. In these recessionary times, none of use can be sure of retaining his or her job. Even public servants are no longer immune. We must each consider the possibility of being suddenly without a job. If this were to happen, we might find that we have to serve a waiting period for unemployment benefit to come through. We need time to adjust our standard of living downwards if another job does not materialise quickly. In the meantime, bills have to be paid. Consequently, it is essential that we have a few thousands in the bank to tide us over. In the past few years, welfare agencies such as Salvation Army, St Vincent De Paul, The Smith Family have experienced a marked increase in applications for assistance. A surprising factor has been the number of "middle-class" applicants. These are people who have had steady well-paid jobs and then suddenly found themselves unemployed and with no money in the bank. They have to go to welfare agencies to obtains assistance to pay the mortgage.

If we think about it, there is a certain priority for expenditure. First priority is food. We cannot live without food. Next comes clothing. We cannot survive for long or work without clothing. Next comes shelter. In an urban environment, this can mean anything from a rented room to a house on a quarter-acre block. Next comes transport. If a person wants to work, he must have transport of some sort. This can mean living near a bus route or railway station to owning one's own vehicle. Medical expenses are also a necessity. We cannot work when ill. However, medical treatment is generally provided free today.

After we have provided for basic needs, we then can think about optional or discretionary spending. Optional spending includes such things as life assurance, new furniture, new appliances or a new car. It also includes recreational expenditure like holidays, eating out at a restaurant, cinema, golf, fishing, sailing etc.

Finally, when we have provided for all necessary expenditure and then decided how much we will spend on optional expenditure, we may find that we have something left over at the end of the year. We then have to decide how to invest this. This situation often applies in the case of two- income families where both husband and wife have steady jobs. Often they consult an investment advisor to advise on how to invest the surplus. It is quite common for such couples to buy an investment property. If you intend putting the surplus in the bank, you can calculate how much approximately you will have in the bank at the end of the year. You calculate this by adding the expected surplus to the balance in the bank at the beginning of the year.

You will need to prepare a written plan for the coming financial year. A pro-forma plan is shown at the end of this article. It should have two columns, one a weekly column and one a yearly column. You will need to keep a calculator by your side to complete the plan. Both columns must be completed. We start with your expected income for the year. You obtain your weekly net wages from your wages slip. Multiply by 52 for a yearly amount. If you are paid fortnightly, you must adjust the figures accordingly. Calculate the yearly interest you expect to receive from bank accounts. Enter it in yearly column and divide by 52 for a weekly amount. Enter your expected tax refund in the yearly column and divide by 52 to arrive at the weekly amount. Include any other income for the year that you expect to receive.

Next we come to expenses. Some expenses you will know as a weekly amount. These will be your weekly shopping expenses, petrol etc. Insert these figures in the weekly column and multiply by 52 for the yearly column figure. Other expenses will be a yearly figure initially. These will be holidays, new car or furniture etc. Enter these amounts in the yearly column and divide by 52 for the weekly figure. Many of the other figures will be fortnightly, monthly or quarterly figures. You will have to calculate a yearly figure and a weekly figure for each of these.

Finally, at the end, add up the weekly column and the yearly column. Deduct the total of the expenses from the total of the income. You will then know your weekly surplus (or deficit!) for the week and year. If the net result is a deficit, you must go back over your plan and cut out some expenditure. If you have recently become unemployed and there are no prospects of obtaining a job in the immediate future, then drastic pruning of expenditure will be necessary. It is essential that your financial plan ends with at least a small surplus. If the anticipated figure works out to a sizeable surplus, you will have to start thinking about how you will invest the surplus.

Below is a pro-forma annual budget. It is suggested that you print it out and complete it prior to the start of your annual budget. Your annual budget could end on any month e.g. 31st December, 31st March, 30th June etc.

Personal Budget for year ending 30th June 200...


                                                                                                                                                                                            PER WEEK        PER YEAR                                                                                                                           

                                                                                                                                                     $             $

I expect my salary (less tax) for the year to be     .              .
I expect to receive interest from banks building societies  etc . .
Dividends from companies . .
Other income e.g. tax-refund, Social Security Family Assistance etc . .
. .
EXPECTED NET INCOME FOR YEAR                                                             $ . .
I expect to have to pay the following expenses for the year for self & family
Rent of house/flat . .
Rates of house/flat . .
Mortgage repayments . ..
Hire purchase/lease of household items . .
Electricity . .
Gas . .
Telephone . .
House maintenance . .
Other house payments . .
. .
Groceries . .
Clothing and shoes . .
School expenses of children (fees, books, equipment, bus fares etc) . .
Medical expenses ( doctor, dentist, chemist, hospital etc) . .
Medical insurance . .
Life insurance . .
Superannuation . .
Union fees . .
Subscriptions . .
Other personal expenses . .
. .
Fuel . .
Registration and insurance . .
Licence . .
Repairs, servicing and tyres . .
Loan repayments/lease of car . .
Other car payments . .
. .
If I have any money left over after paying all of the above, I intend spending . .
it on: . .
Buying a car or deposit on car . .
Buying household goods eg. washing machine, fridge, air-conditioner, computer, . .
dish-washer, furniture suite, carpeting, bed, table, lawn-mower etc. . .
Taking a holiday (air-fares, accommodation etc.) . .
Gifts . .
Sports . .
Other discretionary spending     .            .
. .
EXPECTED TOTAL EXPENSES FOR YEAR                                                    $  . .
EXPECTED SURPLUS FOR YEAR (i.e. Total Income less Total Expenses)   $ . .
SAVINGS   Balance   Expected
  1st July   balance at
30 June next
I had the following balances at banks, buildings societies etc.      .? .
.. .
I expect to have the following balances at banks etc. at 30th June next .   .    ?
(To arrive at expected balances at 30th June next, add expected Surplus Income . .
shown above to the balances shown at beginning of  year i.e. 1st July above) . .
. .

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