We often get asked when preparing cash flow modelling scenarios for clients, “How much should it cost me to live”?
The answer is simple…..it costs what it costs.
Generally the more income we earn the more we spend. There is no right or wrong but it is important to recognise that number for planning purposes to plan ahead. For a family of 4 it might be $5,000 per month plus loan repayments, holidays and school fees, in some cases it is $12,500 per month plus loan repayments, holidays and school fees.
There are many variables that can alter the amount of our budgets, some areas we see discrepancies are:
- atm withdrawals
- eating out
- kids sports
- online purchases
Groceries is an interesting one, do you shop with a list of things to buy or just “wing it” and impulse buy, or do you just buy whatever is on special, or do you shop once a fortnight and “stock up”, or shop every second day for the freshest ingredients, or do you scan products that need replacing & shop online with home delivery or at discount places like ” The Spud Shed”. The options are endless and the variation in prices is alarming.
The point is record it, be aware of it and monitor it. You can’t manage what you can’t record. We have a very simple, automatic online budgeting software package that our clients use to do just that. If you aren’t on this software please contact us for further information.