Budget Series Part 3-Direct Debits Account

Budgeting Blog Part 3

Our direct debits account. I can honestly say this is the single most important part of our family budget. It saves us so much financial stress. If you do nothing else to budget for your family I would say this alone will keep you on track and out of financial trouble.

 OK. Now our bills account. We have so much that just comes straight out of that account. To give you some ideas of what sorts of things you can include in this fortnightly sum I’ll list ours

·         Both life insurance policies

·         Private Health Insurance

·         Contents Insurance

·         Driver’s License renewal (we renew every 5 years so this doesn’t make a big difference to our fortnightly account balance)

·         Mobile phones and internet

·         Car Services (we estimate getting our 4wd serviced twice a year and came up with a rough dollar amount for each service)

·         Compassion (I have a sponsor child in Bangladesh that I send money to on a monthly basis)

·         Credit Card

·         Car Loan

·         School Fees (not such a big deal at a public school as there aren’t many fees, would work better if your kid is in a private school and you pay fees per term)

·         Car Insurance

·         ASG (this is a scholarship program we have for our 3 kids, we pay a little bit of money each month and then when they start high school we get payments each year for the duration of high school to help out with fees, books, uniforms etc.)

·         Cell Care (this one will be all finished with soon-when Isla was born we chose to store her cord blood and tissue, we couldn’t fork out the full amount straight away so we pay it off monthly)

·         Vet (using the last financial years vet bills I estimate what we could be likely to spend the next year)

·         Car and trailer registration

·         PO Box (while in the Pilbara we have a post office box in town as it’s the ONLY way to receive your mail up here)

·        Rent/Mortgage we don’t pay any rent where we live as we are in a company owned house but it is one of the biggest and sometimes hardest expenses to get money for each week/month

Obviously your needs will be very different to ours and you may choose to put more or less expenses in your account. Most of these things are just those little monthly direct debit payments that you hardly notice but it helps to keep them in a separate account so you know that what’s in your everyday account (attached to your Eftpos card) is money for spending. We don’t have an Eftpos card for our bills account as I Bpay all our bills.

 I calculate what these bills cost me per year (I use old receipts or scroll through my bank statements to find out exactly how much the direct debit amount is) and divide by how often we get paid. For example say you have $40,000 worth of bills/mortgage payments per year and you get paid fortnightly. 40,000 divide 26 is 1,538.46. So you would put $1,538.46 (or round up to $1,540) into your direct debit account each fortnight.

Easy right?? Sometimes it sounds like a big chunk of money to take out of your pay every single fortnight, but imagine getting a bill like car registration or home and contents insurance. That can easily be $700-$1500 for one bill. Instead of having to come up with a big chunk of money like that in a couple weeks, you’ve been slowly putting away $20 per week all year so when the bill pops up it can be paid AND you won’t even have to scrimp on your groceries for that week.

It’s also a good way to make sure your bills are never paid late. Instead of getting a bill and waiting until your next pay cheque to pay it and risking it being paid late, the money is already there and it gets paid straight away. Best way to get a good credit score with the banks J And if you can manage to keep a bank happy then that’s basically nothing short of a miracle!!!

 I hope that helps you understand our direct debit account.

 

I have just one more part of this Budget Blogging series. Part 4=Saving!! Where can you save more money…