How To Budget
A budget allows you to control your money. You can save money for big purchases and plan savings to build your wealth.
Start your budget from where you are and plan for where you want to be. You don’t need special software or an accountant to set up your budget.
Set money goals
Work out your money goals, is it to get out of debt, save for a holiday or your kids education, maybe a house deposit.
Once you have a goal, break it down into small manageable steps that you can put into your budget.
Tip: Start today, it may not be perfect, perfection is just an excuse.
Track your spending
Make a note of every dollar you spend to give you a clear view of where your money is going.
You’ll be surprised by how much small things add up. You might also discover hidden costs, such as account fees, subscriptions you don’t use, or mistaken payments.
Knowing where your money goes may be all you need to start spending less. You may even start saving more.
Track your spending every day for a period of time, a minimum of a week. This will help you see all the money going out.
To get a more realistic picture of your expenses, track a month and then a quarter to cover all those other expenses that don’t come up every week.
For now, just track your expenses, don’t worry about changing your spending habits yet.
Ways you can track your spending is using a phone app, writing down what you spend and checking bank and credit card statements.
At the end of your tracking period, look over your expenses and determine what are needs (essentials for living) and what wants (these are things you can live without).
Set up your budget
Set up your budget to your income time frame, for example if you get paid fortnightly, set up a fortnightly budget.
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Record your income, make a list of all money that you have coming in, how much, where from and how often. This will be your wages, income from investments and government payments.
Record your expenses including what it’s for, how much and when.
Regular expenses are needs or essential expenses, these include fixed expenses like rent/mortgage payments, utility bills, rates, food, transport and family costs.
Also personal loans, credit card payment and unexpected expenses like car repairs, pet costs or school bills.
The money left after expenses and savings is money available for spending. This money is for entertainment, hobbies and eating out.
Make a plan for your spending money to help you keep within your planned limit and keep track of your spending, so you know how much you have available.
Tip: Don’t buy dumb stuff!
Review your budget regularly as things change, as you may have to change your goals if your budget isn’t working.
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