Balancing a household budget can be tricky – where is the best place to find savings?

A balanced budget? For Gen X? Seriously? If Treasurer Wayne Swan can’t do it – with the ultimate power to tax the population – what hope us?

Gen Xers’ current life stage is known as “Mega Maid” – the giant vacuum cleaner in Spaceballs – as mortgages and midgets hoover the bank account.

But we do have choices. There are needs and there are wants. I need a house to live in and I need a car, versus I want a McMansion and I want a new Ford Territory.

Let’s focus first on the big things.

Test your mortgage – a mortgage discounting war has erupted in recent months between banks. Another lender might save you thousands of dollars a year.

Your transportation? Cars are the biggest wealth suckers on the planet. Their value falls faster than Wile E Coyote tethered to an anvil. “Upgrading” to a second-hand, four-cylinder job next time could save you $5000 a year on changeovers.

Consume less. Fewer restaurant dinners and coffee, turning off lights, putting on jumpers instead of heaters, taking the kids to a free community outing instead of the movies …

But I’ll tell you what’s better than budgeting. It’s harder, but it has superior long-term rewards.

Investing.

Any budget that doesn’t include putting away for investing … is a recipe for forever having to budget.

Invest in assets that will produce income streams later in life. How can you afford that when you’re struggling week to week? How can you afford not to? You have to find a way. Or this whole budgeting discussion will go “to infinity and beyond”.

Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.