More debits in the bank account than credits?

An important part of any financial plan is cash flow. It’s the backbone of a good financial plan.

Cash flow strategies may include:

  • Reviewing your budget and expenses to reduce waste
  • Identifying surplus funds to invest
  • Considering tax efficient ways to create additional funds
  • Having an emergency fund available for any unplanned expenses
  • Identifying short, medium and long term cash requirements for planned expenses

Developing a realistic and achievable spending plan is a step in the right direction to establish how money will be spent and what money will be set aside for the future. At Acorn we can help you create an achievable cash flow position to help meet your goals.

The Importance of a household budget

BT Australian Financial Health Index has advised that one third of all households in Australia do not have savings.

It’s not unusual for most Australian households to plan out their overall finances together – effectively starting a household budget.

Most Australian household budgets have a primary goal that revolves around the home, or another large expense. Either paying off the current mortgage, or saving up to buy your first home, an investment property, a large holiday, a new car, or even a big Christmas. Therefore, managing spending to create savings, or additional mortgage re-payments should be super important. Some households budget by collecting receipts, others manually logging in a notebook or spreadsheet, others using budget planning software. However, this often gets forgotten, lost track of, or not adhered to.

Acorn Financial Services is here to assist in developing your household budget, tracking it, improving it, and sticking to it moving into the future. We want you to be able to afford that mortgage, or that new car, or that long holiday!

Biggest household budgeting mistakes

  • Only one person is in control of the Household Budget
      Typically, there’s only one manager of the budgeting process per household. While it’s fine for one person to manage the progress against the household budget, others in the household should be aware of the limits in order to manage their own spending.
  • No accountability
      More often than not, where household budgets go south is because there’s no accountability to those involved in the budget when they break their spending rules. There’s no communication regarding the budget, and typically no change moving forward. Accounting and monitoring of all spending activity and measuring this against the goals set out in your budget is super important.
  • Lack of communication
      In some cases, partners don’t communicate about the things they need to save for with one another. The boat or holiday they want, plans to enter a study course, or purchasing a new property, are all examples where discussion and communication is paramount in order to make have a successful household budget.
  • No salary protection
      Most families wouldn’t have an emergency fund or insurance against the cases where the main income earner may not be able to continue providing. Buying salary protection insurance for the primary breadwinner is a great idea to manage this risk. Or at a minimum, an emergency savings fund equal to around 3 months combined salary should be a primary budget goal.

Weekly spend by life stage

  Single person aged under 35 Couple only
(reference person aged under 35)
Couple with kids
(eldest child under 5)
Couple with kids
(eldest child between 5-14)
Couple with kids
(eldest child between 14-24)
Housing $278 $360 $364 $325 $242
Fuel & power $20 $26 $28 $43 $48
Food & drink $104 $207 $224 $279 $314
Clothing & footware $23 $52 $54 $64 $82
Medical & health expenses $24 $58 $67 $77 $104
Alcohol $24 $41 $26 $31 $35
Transport $142 $224 $220 $254 $332
Recreation $106 $182 $132 $208 $253
TOTAL $869 $1,429 $1,484 $1,670 $1,900

Sources:; Australian Bureau of Statistics Household Expenditure Survey, 2009-10.

Strategic financial advice. Protect, plan and grow.