When was the last time you sat down and did your budget? Wait… have you got a budget?
Don’t worry if you don’t, it’s never too late to start controlling your finances with a little less spontaneity.
Travel, buying big-ticket purchases like a new car, and updating your wardrobe for winter can still be on the goals list, but breaking all these things down into a table with your bills and other expenses, means you won’t be left short and waiting on payday!
Aim to keep your necessary expenses at 50%, or under
These include petrol, rent/mortgage, electricity bill, phone bill etc. The necessities to keep a roof over your head and the heater on in winter. Your phone bill is important, but if you are tipping over that 50% perhaps it time to chat to your service provider about a more suitable plan for you that fits within the budget.
SAVE 20% of your income
Whether you get paid weekly, fortnightly or monthly – put 20% of your income into a separate savings account (preferably one that you cannot touch/doesn’t come with an access card) and watch it grow! In the beginning, it seems like a small amount for a while, but then once you start to hit $1k it really does seem to grow quicker. Next stop; house deposit.
Keep 30% for personal spending
This includes entertainment and leisure like your gym membership, Netflix subscription, the daily coffee*, outings to the movies, dinner at your favourite restaurant and drinks on the weekend.
If you find you’re already spending way more than the 30%, and that’s why the 20% for savings is never possible, then we suggest really working out how you can still enjoy life and be social without spending.
Maybe it’s only going out once a fortnight or eating dinner at home before you meet up with friends for 2 drinks later. If you’re not utilising your gym membership, cancel it. Walking around the gorgeous Lake Burley Griffin is free. Tell us. What gym can provide that kinda sunset?
*The Daily Coffee.
Ask yourself, “Do I really need the $4 T/A barista made coffee from the local café downstairs every day?”
What was the answer?
A great way to have your coffee and drink it too, is to purchase a reusable cup that both keeps your coffee hot for longer than a cardboard disposable cup, and keeps our earth clean.
This fantastic minimalistic Budgeting Tool is how we’ve broken down the advice above – give it a go for a few months and see how you start to watch your spending closer. We could almost guarantee that you’ll start to see a difference in the way you spend and save straight away by following this framework.
Once you have established a good habit with your money, it will last a lifetime.
These little comparisons are also great to refer back to when you’re feeling a little out of control and need some reminders:
Your $4 work coffee is $20 a week, $80 a month and a whopping $960 a year – which is pretty much a holiday to Bali, a pair of designer shoes or even half a new couch for your apartment.
The $28 smashed avo with a side of mushrooms you might indulge in once per week is $112 a month or $1,344 per year… This could cover a significant chunk of your car maintenance, winter wardrobe or yet another (or extended) trip overseas.
Give us your budgeting tips in the comments below!