Household budget can save you heaps

Lee and Hayley Miles with their children Beau, Kya and baby Malachy are saving their money for holidays in the UK.

Warren Lynam

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• Clear the cards now, or in 30 years

MOST Australians find it hard to manage their Christmas spending but Lee and Hayley Miles have extra reasons to play it financially safe this year.

Mrs Miles, who usually works three or four shifts a week at a Coast supermarket, stopped working just before the arrival of the couple's third child in December.

She is not eligible for paid maternity leave, which means the family will live off her husband's wage as a bricklayer for the six months she plans to stay home with the new baby.

What Mrs Miles has done to stretch one wage to fill the gap previously covered by two can be a lesson to anyone looking to organise their finances for 2012.

She started by going through each household bill to see if it could be reduced.

The Miles family has made major savings in its electricity bills by installing solar panels and replacing a broken hot water system with a more energy-efficient heat-pump system.

"We've gone from paying $350 a quarter to $3 credit," Mrs Miles said.

The telephone was another area for cost cuts.

They switched phone companies and plans, and use a $50-a-month "infinite" mobile phone deal to make the most of their calls and they use their land-line only to make international calls back to Mr Miles' family in England.

Mrs Miles said food and other groceries remained their major expenditure.

She makes the most of a 5% employee discount by shopping at the supermarket chain where she works but also has another plan to keep the grocery bill down.

"I think what we're going to do is have a set amount that we take out every week to cover food and when that runs out, you just go through the cupboard and use what's left," she said.

The Miles also plan to review their home loan during 2012 - all in a bid to save money for a trip to see relatives in the United Kingdom within the next two years.

Even their kids Beau, 6, and Kya, 4, are saving in their piggy banks for the big trip to see their relatives.

Justine Davies, financial journalist, blogger, and author of Money For Nothing, offers these tips:

1. Do a written budget. Having a written budget is invaluable because it tells you how much money is coming in, how much is going out and, most importantly, where it is being spent.
2. Have a good filing system for tax. It doesn't matter whether you keep it in a shoebox, a folder or an old handbag, but keeping the paperwork for everything and anything that you might possibly be able to claim as a deduction on your tax return can save you significant dollars.
3. Have a good filing system for your bills. We waste a lot of money in overdue fees when we forget to pay our bills on time. Having a central place to file them (in due-date order) can avoid "forgetfulness" and save you some serious cash.
4. Keep an eye on your grocery bill. The easiest way to save on groceries is to have a weekly menu and a shopping list. It helps avoid both wastage and impulse buys.
5. Review your car insurance. Sometimes you can make the biggest savings from those "set and forget" costs. And technology means that it's easy to do. Go online and try comparison sites such as CANSTAR.com.au to find a good-value policy.
6. Review your health insurance. The government's private health website (privatehealth.gov.au) is a good place to start.
7. Work out how much your mortgage is costing. A modest increase in payments or decrease in interest rates can save tens of thousands of dollars.
8. Read your superannuation statement. For a 25-year old on an average income, a 1% per annum difference in return could make $50,000 difference to a nest egg.
9. Pay off your credit cards. If you can't get them paid off quickly then shop around for a lower interest rate - that alone could save you hundreds a year.
10. Get your partner on board. There is no point in you working your butt off to reduce your costs if your partner doesn't help you.

Money For Nothing (RRP $24.95), is published by Wrightbooks and is out this month.

BE PREPARED

Suffering from a Christmas debt-over?

Try these ideas from Credit Union Australia to make the next Christmas financially easier:

• Set a lower limit on your credit card to help manage repayments in 2012.
• Think of Christmas 12 months of the year.
• Make the most of post-Christmas sales and keep an eye out during the year for gifts to spread the financial load and free up some spending money for food, travel and celebrations when Christmas does roll around.