While budgeting for some may be very easy, some of us struggle to manage our money effectively.
If budgeting isn’t something that comes naturally to you, it is important to implement some budgeting techniques.
1) Understand your expenses
It is very important to understand where your money is being spent. It is impossible to budget effectively if you aren’t aware of your regular outgoings and expenses. A good place to start is working out how much you earn per week and in turn how much you are spending in that week. A simple way to do this is writing down a list of every expense you incur in a month or on a regular basis. These expenses can include:
- Rent/board/mortgage repayments.
- Food/grocery costs.
- Travel/transport costs.
- Leisure spending e.g. socialising, shopping and activities.
- Internet/phone bills.
- House hold bills e.g. electricity, water.
After you have established what you are earning and spending per month you are then able to look into what expenses can be minimised or removed.
2) Set a target
Setting a target or a goal amount that you wish to save per month will motivate you to manage watch what you spend per week. This goal may be saving for a new car or a holiday, something that you can reward yourself with. Creating a budget template can be easily carried out as there are many donwloadable templates online. On the other hand you can easily create your own on a notebook or excel document. To produce a successful budget you will have to note down your exact income for the month and then included all your expenses. You may want to break this down into a weekly or fortnightly structure depending on the frequency of your pay. From there you can begin to divide the remaining income into different categories, including savings, socialising and entertainment. The main goal of the budget is to show you how much money you have to save or spend per month.
3) Specific transaction accounts
Some of us are prone to spending whatever money is on our bank card each month which is generally a negative mark on the budget that is set up. If you are someone that is prone to spending the balance of your card each month it may be wort setting up a number of transaction accounts to prevent you from doing this. An example of this is to set up a spending, saving and outgoing accounts. This will help you allocate your money into the necessary places and aid you in not going over budget. Making sure your savings account and outgoings account is not linked to your EFTPOS card is also a good idea. This will prevent you from withdrawing money from certain accounts.
Your Mortgage Choice broker can review your credit history and help you to establish a plan to improve your financial history. If you need any assistance in this matter please don’t hesitate to call us on 02 9358 4855