Taking control of your finances starts with understanding them. Budgeting doesn’t have to be hard when you break it down into parts. In this post, we’ll help you find the right tools and get started on building a budget and taking control of your finances.
While there are major health concerns over the impact COVID-19 has on our health, it is important not to forget and ignore the financial position this pandemic has put us all in. While we are all being kept isolated at home, it may be tempting to splurge on our finances. However, it is important to ensure we are still sticking to our financial goals and only spending when necessary.
Get the right tools
Before you get started, you’ll need to choose the tool you want to use to track your spend.
Smart Money offers an awesome online budget planner or if you want to go old school, you can use something as simple as a notebook or Excel or Google spreadsheets.
Work out your income
This might sound easy but people often forget to think about what they actually get paid after their tax and super. Pull out a payslip and look at how much you’re actually seeing each pay packet. Record how much money is coming in, where it is coming from and how often you are receiving it (e.g. weekly, fortnightly, monthly or yearly).
If you’re a freelancer, this can be slightly harder. You might start with last year’s tax return and use that as a baseline for what you’ll earn this year. Don’t forget to include income from any side hustles, bonuses or investments (like shares or investment properties) that you might have or consider any significant changes in income (like taking time off to have a baby) that might be coming in the future.
Work out your spending
Before you can start your budget, you need to work out what you’re already spending. Go back over your bank and credit card statements. Go as far as the last three months and look at what you’ve been paying for. Again, take into consideration how much you are spending, what for and how often you are spending.
Start to bucket your spending into categories like the following:
- Debt (HELP debt or any monthly repayments on credit cards)
- Food and Drink (don’t to forget to include all those takeaway coffees and dinners)
- Health and Wellbeing (medical bills, gym membership, yoga studio, hair and beauty)
- Premiums (make sure you factor in those once a year costs like health insurance)
- Entertainment (those little costs like movie tickets, weekends away and presents)
Analyse your spend
Now you know what you’re earning and what you’re spending, it’s time to start making some changes. You need to ensure your spend is less than your income. Also, anticipate large or unexpected purchases – like getting your car fixed.
You need to be realistic about where you can save costs. Try not to make it too hard or there’s no way you’ll stick to it. Start to think about small changes you can make to save on your expenses.
Budgets don’t have to be scary and 99% of the hard work is done in the planning. Finding the right tool for you and getting all your information together will help you quickly see patterns on where you could start saving. Now that you’ve set your budget, the next step is to ensure you stick to it.
Connect with one of our financial experts to learn how you can get the most out of your money
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