It doesn’t matter how much money you have or make, sometimes it just doesn’t feel like it is enough. When you create and stick to a budget, at least you know how much you actually have and you can avoid that urge to splurge.
Budgeting shows you where you are financially and helps you map out a path to where you want to be. By creating a budget and setting aside a few minutes a week to keep track of your money,
you will be able to:
make informed decisions about what to do with your money
figure out what changes you should make in your spending habits
start getting into good saving habits.
Step 1 – track what is coming in and out
The first thing to do is figure out what money you have and where it goes. Try to keep a diary of your expenses and your spending for a couple months. This will enable you to calculate where your money is and how much spare cash you have after everything is paid.
Your payslip is a great place to start when looking for the money you make. Be sure to check out any other sources of income, such as Centrelink benefits, rental income or money from relatives. Your income could be periodical or come in chunks, so it might be easiest to average your monthly income.
Make a list of all the fixed expenses you have such as credit card bills, rent or mortgage payments, and grocery bills. Don’t forget items that pop up unexpectedly such as holidays, birthdays or insurance premiums.
Step 2 – manage your budget
Regardless of whether your budget is in the red or in the black there are things you can do to be thriftier. Some easy ways to reduce your spending are:
- Find small, non-essential items you can cut back on. What can you do without?
- Are there any direct debit payments which are being paid without you actually using the service? This could be an old internet provider or a gym you don’t go to any more.
- Check out your interest rates. Is there any bene t to consolidating? Can you shop around for a better deal?
- Can you get a better deal on your services? Sometimes switching your phone, mobile, gas or electricity can provide you substantial savings, it helps to look at all your options.
- Can you pay more than the minimum on your debts? Whether it’s personal loans or credit cards, paying the minimum will hardly make a dent as you will only be paying o the interest.
If you’re having difficulties repaying your debt, speak to your lender. Whatever happens, don’t ignore the problems. By being open and honest about your financial difficulties with your lender,
you will probably find they are open to review your repayments and look at other solutions to help you out.
Step 3 – make goals and stick to them
It is time to get your money to work for you by making financial goals:
• Short term goals – make them achievable in a realistic timeframe. They could be as simple as paying o your credit card or saving up for a family holiday. Make sure you reward yourself when you have achieved them.
• Long term goals – these can be harder to achieve as they seem so far away, but look at goals such as saving for a deposit, paying o your mortgage quicker or saving for your retirement.
• Expect the unexpected – it is a good idea to put some money aside for emergencies or unexpected events. You could aim to save enough to cover the cost of replacing an expensive household item, but a lot of people aim to have three months’ pay saved up.
Once your goals are made, stick to them. But don’t beat yourself up if you slip up for a month or two; simply reassess your goals and get back to them.
Step 4 – speak to a professional
We are always here to help. If you feel that you are in over your head and or just want to get a step up with your finances, speak to us about how we can help you create a financial strategy that will help achieve your financial goals.