15 Jul How to create and stick to a budget
As we enter a new financial year, many people decide it’s the perfect time to take a look at their finances. They re-evaluate where their money is going and what cuts they can make. However before anyone decides to make a change, they must first understand where are they spending their money.
The best way to know where you are spending your money is to create a budget and establish what you can cut down on. In this blog, we have compiled a list of strategies that you can use to improve your financial position and some tips on how you can stick to your budget.
Set up periodic payment
It is very easy to forget when your utilities bill or council rates are due for payment. That could mean that you struggle to pay them and need to make cuts in other areas. If you set up periodic repayments then the payment will automatically come out and you won’t even need to think about it.
It’s worthwhile doing the same for other periodic expenses such as yearly vehicle registration payment, private school fees as well as insurance expenses.
Create different accounts
To go one step further, you could create different accounts for different purposes. Create an account for your savings, one for compulsory spending such as food & groceries, another account to splurge and reward yourself such as a holiday.
By creating accounts for different purposes you’re giving yourself both the freedom and the discipline to reach your financial goals while still having money for the things you want, also known as discretionary spending.
There would be nothing worse than finding a great holiday deal but not being able to take advantage of it because you didn’t allow for it. As the fund increases, you’ll find your attitudes towards money may change and that you actually don’t want to spend even though you can afford to. You may even find that rather than buying the cheapest groceries you have more freedom and that every so often you can buy luxuries.
Every pay cycle you should put money into an account that you just use for savings. When you pay yourself as soon as you get paid, you’ll find that you don’t miss the money and you’ll be setting yourself up for a more stable financial future.
Then as your pay increases or your financial position improves you should try and save at least 50% of the increase.
Doing so sooner rather than later will ensure that you have a nice amount of money to put down as a deposit for a property and also demonstrate to the lender that you are discipline in your money habits and that would help in your loan application.