How often do we find ourselves scraping together cash waiting for our next paycheck, only to blow half of it within 24 hours of getting it on something we surely don’t actually need! Budgeting can be extremely difficult when the world we live in is designed to make us spend, spend and spend again. Paywave has made spending even easier with just a tap of your card making those seemingly necessary things start to add up!
Google ‘budgeting tips’ and you’ll find hundreds of different ways to get started on your savings. You can find spreadsheets, apps and articles available for free online to help guide you through each step of the way. Take a look at what the Australian Government have to offer here. Or, simply read on to find out more about what the experts say are the best ways for you to as MyBudget put it, “live your life, free from money worries!”
Budgeting is not just about cutting back costs
A budget is a plan. A plan to create a simple system for you to spend your monthly earnings. Planning your spending makes it possible to buy those things that are important to you without leaving you broke, waiting for your next paycheck and, hopefully, tuck away a few dollars in a savings account.
The fundamentals of budgeting
Whether or not you’ve set out a clear budget before, it may be a good idea to start from scratch to give yourself a fresh perspective of what you need to be spending money on, what you can cut and where you can save. You might also discover some expenses you forgot about, like that sneaky Stan subscription.
What are your monthly earnings?
- Expenses: Rent/mortgage, Insurance, Telephone, Internet, Groceries, Car or travel, Health care, Child care
- Debts: Student debt, Credit cards, Loan repayments
- Savings: Short/long term plans, Emergencies
Subtract the above costs from your monthly earnings to calculate your spending allowance. If the total comes to zero, don’t worry! The most important thing is being able to cover the necessities. Next, you’ll want to address what those necessities are. Do you need to shop at specific grocery stores, or could you find a cheaper alternative? Would buying products in bulk and preparing food at home help you cut down on costs?
How to increase your spending allowance
Though it’s obviously easier said than done, finding a higher paying job can take the pressure off. It’s sometimes hard to know what your skills and experience are worth. Try asking the experts for an evaluation to see whether you’re reaching your earning potential.
Consider re-mortgaging your house or moving to a house with lower rent. Are the kids starting to move out? Do you still need that extra space at home?
Cut down your daily expenses by eating out less. Remember to bring the leftovers to work in a container (good for the environment too!). That way, when it comes to the weekend and you want to treat yourself, it’ll feel that much better. Preparing your food also gives you more control over your health and diet. Try some of these easy lunch ideas that are perfect for work.
Spend more time in the outdoors. It’s free and is full of and health benefits. Camping and trekking are easily affordable and accessible ways to get away from spending too much money on the weekend. You’ll improve your physical, mental and emotional wellbeing.
A family budget will help you get on with important family life without having to worry about your finances. Work out how much you spend weekly on the kids lunches and after school activities and always be prepared for unforeseen expenses just in case the car breaks down!
Need some help?
If you’re at struggling at home to look after yourself or your loved ones, it might be worth checking to see if you’re eligible for financial support from the Government. In Australia, we are fortunate enough to have access to this support when we need it. Your earnings may be too low to cover your expenses at home. To ensure that you and your family have enough food on the table and a good enough shelter over your head, talk to CentreLink. They may be able to help.
Break down your spendings
You may or may not have already heard of the 50/30/20 rule. It was devised by Senator Elizabeth Warren, from the US, as a simple way to divide and structure your spendings.
The formula works like so: you put 50% of your earnings after-tax towards your ‘needs’. These include your food, rent or mortgage and other fixed bills that must be paid each month. 30% of your wages should go towards your ‘wants’. These are things that revolve around the things you love to do, like sports match tickets or a new pair of shoes. The final 20% should be allocated to ‘savings’. This could also be used to pay off debt, cover emergency expenses or fund your dream relocation to Europe.
Shop around for the best bank or loan
Some banks offer basic accounts with:
- No fees
- Free monthly statements
- No minimum deposit
- No overdrawn fees
Shop around for these deals they’re out there and some of them are with the big 4 banks! If you can’t find something there that suits, you could try the NILS program (No Interest Loans Scheme). This program is designed for people on low incomes who need safe, fair and affordable credit up to $1,200 with no interest or fees. You will have to qualify for the program but it’s worth checking it out.
Less is more
Taking away the clutter, seeking a more minimalist approach to your lifestyle can lead to more money to spend on the things that matter. Our possessions become an extension of us holding us back from living our lives with a sense of freedom. By detaching yourself from the ‘stuff’ in your life, you can experience freedom from your money, materials and work.
Consider selling off some of your clothes you don’t wear anymore. You’d be amazed by what people will pay for good quality used clothing. The secondhand tech market is constantly trading old items. Know the saying one man’s trash is another man’s treasure? Get on Gumtree or eBay and start selling now!
Why budgeting can benefit us all
Larger companies use budgeting to outline the profit and cost of a project. For example, if the marketing team at Google wanted to host an event. They would need to propose a plan for the event, piecing together all of the costs, from the music and food to the venue. By doing this, they can work out the total cost of running the event, as well as how much profit they might generate.
In comparison, young part-time workers, who may be studying or pursuing their dream job can also use budgeting to help them with their finances. Creating a personal budget plan will highlight your spending and clearly illustrate how much money you’ll have left at the end of each month. Saying this, it’s much easier said than done. Personal budgeting can easily be brushed under the table when we see a new pair shoes or spontaneously book a holiday. For this reason, it’s hugely important to set a realistic plan that you know you can stick to and remember to allow room for impulsive moments.
Have you heard of the Saver Plus Program?
The program offers low income families the opportunity to learn budgeting and saving skills. To be eligible you will need to have a relevant concession card to join the Saver Plus program.
ANZ offers a hand up by matching your savings dollar for dollar up to $500! If you are chosen for the program you will need to make regular deposits over 10 months and attend workshops to build your budgeting skills.
You might want to consider using budgeting and saving apps like PocketBook or TrackMySpend (Australian Securities and Investment Commission). They can be a great stepping stone for anyone looking to get their budgeting back on track or someone starting out for the first time. You can download both for free from the Google Play or Apple App Store.
Finally, budgeting, saving and managing your money does not have to be a constant headache. It does take some initial time to set up direct deposits and figuring out when bills are coming etc but once the initial set up is done the budgeting part is really more of a maintenance task rather than a weekly headache.
Being organized and committed to your budgeting is the key. We are all going to fall off the wagon or get an unexpected bill every now or then, but if we organize our budgeting to include some rainy day money then these situations will be a breeze!
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