How are you going now?
Taking stock of your financial situation is the first step in managing your money. Ask yourself two important questions:
Are you better off today than a year ago?
Write down what you own and what you owe today and a year ago in a table, like the one in our example for Nat and Sam. It’s fairly easy to make a few estimates, and then use your mortgage, credit cards, bank accounts and super statements to fill in the blanks.
What Nat and Sam own and owe
| What they own | Value today | Value a year ago | Change |
| Home | 375,000 | 350,000 | Up |
| Car | 14,000 | 16,000 | Down |
| Superannuation | 55,000 | 47,000 | Up |
| Total owned | 444,000 | 413,000 | |
|  | | |
| What they owe | Debt today | Debt a year ago | Change |
| Mortgage | 247000 | 250000 | Down |
| Car loan | 11000 | 16000 | Down |
| Credit cards | 3000 | 1500 | Up |
| Total owed | 261000 | 267500 | |
| Nat and Sam's net worth | 183000 | 145500 | |
A year ago, Nat and Sam bought a home and a new car. Now, their home is worth more, their super has grown and their car loan is coming down. Unfortunately their credit card debt has gone up, and they don’t have much saved for unexpected bills or time without work.
If Nat and Sam were 25 years old, they’d be pretty comfortable, because they have plenty of time to pay off their mortgage and build up their super. If they were 55 years old, they’d be facing some serious problems with so much debt and so little super, even if they kept working till 65.
When you draw up a similar table for yourself, first look at what changes have occurred. Then think about your age and how much longer you expect to work to see if you are likely to be comfortable or if you face some serious issues.
Are you saving any money?
Record all your income and expenses for a month, as we have for Nat and Sam below.
TIP! |
List each loan repayment as a separate expense, then convert everything into monthly figures. |
Nat and Sam's income and expenses
| Income | Amount | Converted to monthly amounts |
| Sam's take home pay | $1707 fortnightly | $3710 |
| Nat's take home pay, works part time | $969 fortnightly | $2106 |
| Family tax benefit* | | $314 |
| Total income | | $6130 |
| | |
| Expenses | Amount | Converted to monthly amounts |
| Home mortgage repayments | $2018 monthly | $2081 |
| Car loan repayments | $508 monthly | $508 |
| Credit card interest payments | $590 for 2 years | $25 |
| Car running costs | $4500 yearly | $375 |
| Food and groceries | $260 weekly | $1130 |
| Holidays, entertainment | $100 weekly | $435 |
| All other costs (school, clothing, medical, insurance, repairs, rates, water, electricity) | $1290 monthly | $1290 |
| Total expenses | | $5844 |
| What Nat and Sam save each month | +$286 | |
* Be sure to include the Family Tax Benefit. To find out if you are eligible go to the ATO's website www.ato.gov.au 
.
Nat and Sam, who both work and have two children, are doing well to save some money. However, their debts take up a lot of their money, and $286 a month won’t stretch far. There’s also not much room for them to put extra money towards paying off loans or building up money for their children’s education.
Looking at your own income and expenses is a first step in budgeting, and shows if you’re making progress, standing still, or going backwards.
More about managing your money
FIDO Website: Printed 09/07/2010
