Running into financial problems is usually the result of mismanaged finances or poor spending habits that can cause issues for you in the long run. It’s worth taking a good look at your finances and spending habits every now and then to see if they need a makeover. Good financial habits will keep you out of debt, keep your credit score in the clear, and help you to appear more favourable to lenders when applying for finance approval. Here are a few ways to manage (and save) your money wisely.
Identify expensive habits and hobbies: If you are someone who enjoys stopping at your local barista for a coffee before work, trawls the bookstores on the weekend for a new read, or buys lunches during the week – this may seem harmless but can be a bad spending habit. A $4 coffee and a $5 sandwich each day at work adds up to over $2000 each year that you could be saving for a housing deposit or using to pay your bills. To help curb these expenses, look at a bank statement and examine your spending for the previous month. See where you are spending your money, and decide what you really need. Perhaps making a coffee at home in the morning, making your own lunches and joining a library would free up some cash flow. It’s all about the essentials.
Impulse buying: This is one of the easiest and most common habits to fall into, however if you actually tracked your impulse spending, most people would be shocked (and horrified) to discover that they can add up to hundreds extra per month. Avoid impulse buying by planning your shopping trips ahead; create weekly meal plans, stick to a list that includes only these ingredients, avoid meaningless snacks and desserts and buy staples in bulk. If you need a little more help in this department, you can take out cash in advance and only bring what you need to make planned purchases. Leave your other cards at home.
Deal with your debt first: Always pay your pills first on pay day – set up automatic payments for your rent, mortgage, car loan and credit cards. Once the essentials have been dealt with, send another chunk into a savings account that you cannot access by card. Try to forget the details to your bank account and let these savings accumulate. What you cant touch you cant spend. This will give you a handy emergency fund, and will also look fantastic to lenders when applying for finance. They love seeing evidence of genuine savings.
Plan a no-spend weekend every month: Incorporating a no-spend period into your monthly budget can be a great way to save money. Start with a no-spend day, and work up to the entire weekend. Be creative when finding things to do; most museums and art galleries within the Sydney CBD have free exhibitions to the public and many libraries offer free passes to certain attractions. Activities like fishing, going to beach, cooking at home, or hosting a movie night are also easy, simple ways to stay entertained without splurging on dinner, drinks and entertainment.
Cancel useless subscriptions: Do you pay monthly subscriptions on a range of different services? Are you sure you use them all? For example, do you have Foxtel and Stan or Netflix? Do you pay a monthly fee to Apple Music or Spotify, but find you prefer the radio when you’re at work? It may be time to cut down on some of these subscriptions, then. Many services will allow you to freeze your subscriptions for a month without any penalties or obligations. Take a month to suspend the subscriptions that you aren’t sure about. If you don’t miss them after the four weeks are up, get rid of them altogether.
Budgeting can often feel very restrictive. Hopefully these tips will help you to get your finances in order and stay on track without feeling as though you are living on a shoestring.