It’s quite simple. You must be earning more than you are spending. If you find your credit card often reaching its limit or cringing when a large bill arrives it is possible you may need to review or prepare a household budget.
Keep your eye on the prize
Whether you are dreaming of an overseas holiday or just wanting to pay your home loan off quicker it is important to have a goal and keep track of your progress. When my husband and I were saving for our first home deposit we had a “thermometer” graph on the fridge. Each fortnight after payday I would mark with highlighter how much our savings had grown. Less than 12 months later we had a deposit
In 2012 by investment watchdog - the Australian Securities and Investments Commission (ASIC), found the average Australian household spent around $69,166 on general living costs each year. About $1,290 per week. In 2017 with rising costs this figure is surely to have grown
Despite these figures, only 54% of people know exactly what their money is spent on. (Do you?)
Skip the guesswork with a budget
One of the best ways to know where your money is going is by following a household budget.
And it’s a lot easier than you may realise. Budgeting simply involves working out how much cash is coming into your household, then comparing this to the amount that’s being spent.
Income is pretty simply to work out – use your group certificate or payslip, credits to your bank account
The outgoings is where we tend to underestimate or “forget” certain expenses until they are due. Car Rego, House Insurance, Grocery shopping all necessary and unavoidable. Technology can help track some of the irregular costs. ASIC offer a free app available on Google and Apple – TrackMySPEND. To even out those monthly, quarterly and yearly expenses Mortgage Choice offer a Budget Planner as does ASIC
That’s the beauty of preparing a budget. It will highlight areas where you can cut back spending painlessly to free up extra cash. That means more money to put towards a deposit on your first home, or to make extra repayments on your home loan to become mortgage-free sooner.
To make your budget a success, remember three important tips:
- Leave some spending money for the fun stuff –often people fail with a budget because they don’t allow spending money for going out and having fun. Moderation is the key – you work hard, you deserve to enjoy but there needs to be a limit.
- Be realistic – guessing won’t work. Keep an eye on the bills or have a look at your statements over the last 3-6 months. Often internet banking sites categorise your spending habits
- Allow some wiggle room – life is changing – quickly. Any changes to your situation should be adjusted in your budget. New car, new baby, change of job all impact the surplus money we will have.
Remember, if you are really not sure where to start George Cremona and the team at Mortgage Choice Wynnum can help you get started. We will even help you save some money on your home loan with a free home loan health check. Call today!