When we work so hard to earn the money we do, doesn’t it make sense that we ensure that we spend that money wisely? If you are anything like I was in my early years, I covered my bills and put a bit into a savings account and pretty much spent the rest! I couldn’t have even told you what I spent the money on and probably no longer own any of the ‘stuff’ that I did spend it on!
If we’re not tracking our income and expenses, we may end up spending more than we’re making! Over time that can put us into some pretty hot water financially. We may also spend a lot more than we’d like to believe on things like eating out, going to the movies or new clothes. This is even more relevant in our ‘tap and go’ spending culture where we don’t realise how much we’ve spent until we check the bank balance!
Introducing… the budget! It is a great tool to see at a glance what we have coming in, what’s going out (and what that money is paying for) and if there’s anything left at the end of the month to put into savings.
Having a budget gives us more control over where we want to really spend our hard-earned cash. Maybe that’s dinner and a movie, but maybe it isn’t. Wouldn’t it be nice to have an actual choice?
There are a couple of factors to getting your budget right! The budget tracking system and your goals!
Your budget tracking system
A budget simply tracks your money. You record where the money comes from each month (your income) and then write out everything you spend it on, starting with your regular monthly bills like mortgage or rent, car payments, utility bills etc. What’s left after all the bills are paid is your discretional income.
You need to have a budget tracking system that you resonate with! This makes a huge difference in your ability to stick to your budget! The tracking system needs to be something that fits into your way of thinking and easily integrated as part of your daily/weekly routine. If it doesn’t fit your routine, you won’t do it! I tried the traditional budgeting systems many times and failed each time. I then tried a calendar budget where I could see upcoming expenses that related to dates of income and BINGO. Now I don’t overspend on those ‘wish’ items because I can do a quick check of my budget before any purchases! I now check in with my budget daily so that I know if I have any ‘throw away’ funds for random ‘stuff’.
Your financial goals
Your financial goals also play a big part in your budget! It is so much harder to save for a ‘rainy day’ than for a specific goal! Exactly what are savings for? Some people do like to have something stashed away for that rainy day, but most of us prefer not to think about that rainy day happening! So, let’s look at something a little more treasured to save for! When you focus on what you need money for in the future, your ability to save for it increases! When you have a specific amount and date in mind, it is even easier to put that money away! This has a flow on effect in that it is easier to say ‘no’ to some of the expenses that you have!
Saving money without a budget is difficult. We go in with the best of intentions at the beginning of the pay period, but somehow there isn’t anything left as we are hanging out for the next pay day!
A budget gives you a chance to be a bit more proactive. Set aside some money for savings at the beginning of the pay period, even if it’s just $20. Put it in the budget as a regular expense, just like you do with your other urgent bills. If you need to, open a separate savings account so you’re not tempted to spend it.
Identify where you waste money
Having it all in front of you in black and white helps you identify things you’re wasting your money on.
It makes you reconsider if you really want to spend well over $200 a month on your phone and internet bundle that you don’t fully utilise. Or how about that yearly magazine subscription to something you no longer read?
Go through your expenses and re-evaluate if this is REALLY how you want to spend your money!
Check your budget weekly to stay on top of it!