For many Australian families, the preparation of a household budget is accompanied by much wailing and gnashing of teeth. Times are tough in suburbia and many are finding it challenging to make ends meet. The so called “cost of living crisis.” However, in trying to balance the household budget, it’s important not to be penny wise and pound foolish.
Skipping an oil change might save you fifty dollars today but a seized engine down the track will cost thousands of dollars. Equally, driving to ten suburbs to save a few cents on a supermarket item is hardly economical when the cost of fuel is included.
Every family has those little extras that add up quickly. The trick is to find painless ways to cut expenses and save money. For example, did you know the average Australian wastes $1,500 worth of food each year? Or that bad habit with electrical appliances which unnecessarily pushes up the cost of electricity bills?
Preparing a household budget is often a choice between needs (food, clothing, shelter) and wants (sports car, overseas holiday). Wants and needs differ from person to person. Whereas I spend just $5 for admission to the local swimming pool, my eldest daughter spends lots of dollars on gym membership. In this area of our lives, she thinks I’m tight-fisted and I think she’s extravagant!
I can’t tell you whether a take-away cappuccino is an essential need or a luxury want, but what I do know is that at $4.50 per cup, you will spend $1,642.50 per year on coffee. Only you can decide whether the $1,642.50 could have been put to better use such as deposited into a savings account or paid off your mortgage.
Regardless of your personal situation, everyone should have a budget planner to help organize money inflows and outflows. If you haven’t got one, there are plenty on the internet. Happy budgeting.
Now there’s some food for thought!
Sincerely
John (JT)Thomas
This opinion piece is provided by John (JT) Thomas, a 48- year veteran of the financial services industry and since 1987 a specialist in commercial mortgage funds. Considered by many to be the father of the modern commercial mortgage fund sector, JT helped establish and then managed – for 17 years – what became the largest and most successful commercial mortgage fund in Australia – The Howard Mortgage Trust – with assets exceeding $3 billion. Under JT’s stewardship, investors never lost one cent of their investments and indeed, investors always received competitive monthly returns. JT was also Chair of the $40 billion mortgage trust industry sector working group.
JT has been proudly involved with Princeton for nine years and sits on both the Princeton Credit Committee and the Princeton Compliance Committee as well as being an advisor to the Princeton Board.
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