Budgeting-Our Hot Tips
Budgeting doesn’t have to be complicated. Here you will find our hot tips to becoming brilliant at budgeting so you can start saving and spending to achieve your personal and financial goals.
1. The right mindset: Think budgets are boring? They certainly can be if you don’t have a financial goal you’re truly passionate about. If you want to be feeling fired up as you work through each step in this budgeting guide, then do some work on getting clear about what money could actually mean to you. You will struggle to stick to a cash flow, budget or savings plan, if it does not align with your true values. Identifying your values will have the greatest impact on motivating you to make changes.
2. Money in, money out: Taking a microscope to your cash flow is where the budgeting action starts as it’s essential to helping you set achievable targets for spending and saving. Budgeting starts with a look at money in and money out, to get to a realistic budget for your expenses. Careful monitoring of your spending can also shine a light on how much your current habits actually match up with your values and goals. If you have your heart set on an overseas holiday once a year, should weekly restaurant meals be an option? By cooking at home for three out of every four weekends and saving that money towards travel instead, you’re directing your budget towards what matters to you. There are plenty of budget tools out there to take the hassle out of watching your dollars and cents. Once you’re in the habit of logging your expenses, the apps can do the heavy-lifting by collating results and giving you a big picture view of where you could be spending less. You can also use the budget planner from Money Smart to take a closer look at your cash flow.
3. Organise your accounts: Once you have some figures at your fingertips for essential monthly expenses, setting up a number of accounts can help you keep that spending separate from the money you save. The single biggest mistake most Australians make is operating only one bank account. Everything goes in, everything goes out. The finance mentality of most of us is to spend whatever is in the account. The more you earn, the more you spend. Instead of seeing your entire salary disappear each and every month, try setting up four accounts for your income and allocate reasonable amounts to each.
4. Get strict on spending: Values and lifestyle goals are critical in motivating us to achieve these spending and saving targets. You will be more financially disciplined if you know that this will help achieve your most important goals in life. This will lead to a natural reduction in discretionary expenditure over time. It can be very helpful to understand where your blind spots are when it comes to giving in to temptation. Even with the best intentions, our brains are wired to be easily swayed into buying, even when we know it’s beyond our budget.
5. Team up and keep going: When you share your financial goals with someone else and commit to reporting back to them on your progress it can really motivate you to keep going. Teaming up with a budget buddy is a great way to keep you accountable for sticking with your new saving and spending regime until it becomes a habit. Surrounding yourself with people who share your values about money can also help. Engage with friends who’ll keep you honest about controlling spending and working with professionals like a financial adviser who can bring new ideas as well as support towards your financial goals.
Creating a budget that’s right for you is just one important part of sorting out your finances. Discover why working with us can help you achieve your financial goals.
Stu Varidel and Your Choice Financial Planning Pty Ltd trading as Heart Financial Advisers are authorised representatives of Sentry Financial Services Pty Ltd AFSL 286786.
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