Today there is little you can achieve without adequate funding. We can all talk about bartering and off the grid economies where we swap something we own or can do for something someone else has that we want. Realistically this rarely stretches past a few dozen backyard chook eggs or a quick service of the second car. Adequate funding means having the right amount of money to get the job done in the way we want it done, in the time we want it to take and to a standard we are happy to pay for.
The secret to getting any project done within budget and on time, which is what we are talking about here, is to have a proper budget in place. Whether you are renovating the bathroom, building a holiday home or looking at an investment property, you need to have a budget.
Without an idea of how much you need in the first place you can’t know if you are adequately funded or not. Once you are adequately funded, you need to have that plan in place so you can monitor and manage expenditure and keep control. Control requires information and organization and this is precisely what a budget achieves.
Not everyone is of the frame of mind of an accountant or bookkeeper, quantity surveyor or project manager yet we all need to be able to budget our finances, even just to handle day to day living and not live payday to payday. Remember, all a budget is, when you boil it all down, is a plan. A plan is a guide, it is not chiseled in stone and inviolate. Too many people, when you say the ‘B’ word, turn off. Their eyes glaze over and they tune out because they don’t want to hear what you have to say. Simply because they have the wrong concept of what exactly a budget is or does.
The easiest way to begin is to draw a line down the middle of the page and write Income on the left and Expense on the right. You can do it the other way around if you prefer, it really doesn’t matter. List all sources of income from salary to investments if they pay regular dividends and so on. On the right side under Expense, list the regular stuff first. You need to decide if this is a weekly, fortnightly, monthly or quarterly budget. It depends more on how you are paid but why not work on a monthly set of figures?
With your mortgage or rent second on the list, start writing down the things you know are the same pretty much month in, month out like phone bills, utilities (adjusted if necessary from quarterly to monthly by dividing by three). Figure out what you spend on food and fuel and allow for annual bills like car registration, insurances and so on by bringing them to a monthly amount.
The first item on your list should be around 10% of your gross income and that should be savings. Pay yourself first and you will have money for rainy days, unexpected emergency expenses and what have you. In time the savings will fund the renovations at which point you do up a budget for those. Funds in hand on the left, job costs on the right and include a little extra for unexpected expenses, over runs and so on. This can act as a materials list and also help you organise the job and check you are staying on budget. Remember, manage your money, don’t let your money manage you!
