Want to know the secret to being good with money?
Budgeting is the answer. Budgeting is all about taking charge of your money, rather that feeling like it controls you. Whether you have a little bit of money or a lot, budgeting can:
- Get you off the treadmill of living pay-to-pay
- Ease money stress and enable you to stay on top of your bills and commitments
- Let you direct your money to where it will get the ‘best bang for your buck’
- Enable you to set goals so you can enjoy more of the good things in life.
You may think that spending up on big things is what gets most people into trouble with money, but often it is the everyday little things that end up costing more over time.
So let’s talk Budget! These are the steps to any good Budget….
- Do a Spending Diary
Decide on a timeframe of how long you will track your expenses for. We recommend at least a minimum of one month. Jot your expenses on a NotePad or download the free app on the ‘ASIC Money Smart website – titled TrackMySPEND. Record everything you spend and at the end add everything up and this will give you a good snapshot of your current day-to-day spending.
- Separate your Expenses into two Buckets
Bucket One is all your Fixed Expenses that you are required to pay. i.e. rent, electricity bills, car rego
Bucket Two is your Lifestyle Expenses – those things that you want but you could live without
- Make your Budget
Place your Income at the top (Money coming in) then subtract your Expenses (money going out).
- Prioritise where you want your money to go
The next step is to refine your budget and direct your money to where it matters most. This will help you find the right balance between spending and saving.
- Set goals for the future
Set your goals and make a plan to achieve them.
- Act to make your money work for you
The trick is to make it as easy as possible for yourself, so try to make things happen automatically. If you are paid a regular income, set up a direct debit from your bank account for the day after the money is deposited for all of your regular bills. This works well for rent or mortgage, personal loan or car repayments or paying off credit card debt.
- Stay on Track
After all your good work putting together a Budget, make sure you keep it on track! Check your Budget at least once a year to see how you are managing and update it if you need to. Stay motivated – put a picture of your goals on the fridge as a daily reminder.
Now you know the secret to being good with money. A few simple steps really do make a difference! And if you need a little help, that’s ok – just give us a call!