New Year, New Budget

New Year, New Budget

Does the word budget make you feel slightly nervous? It shouldn’t. Budgeting is the key to having full control over your finances and managing debt; and if done right will be your next best friend.

Here’s are a few suggestions to help get you started:

Categorise your expenses

The best way to start is by putting your current expenses into different categories. Start with the bigger expense categories, like home and car payments, before breaking your budget down into smaller expense categories, groceries etc.

This is where you can determine which expense categories are essentials and which are extra expenses.

Know how much you have

If you have savings accounts, investments, emergency funds or any other financial tools, you will want to know how much money is in each account. Make note of this information, it’s important for determining your net worth and the ways to make the best use of your capital in the future.

Calculate what you spend

Study your bank statements, keep track of your monthly bills, dig up those dreaded till slips and make sure to get a truly accurate measure of where your money goes. Accuracy is key. When you know what you already spend, it’s easier to know what you are budgeting for. The point of a budget is to plan, and hopefully spend less.

Calculate what you can actually afford spend

Judging by the amount you earn, divide and budget what you can afford to spend into your different categories. Be realistic. Remember to take your savings into account (this also comes off your budget) and the extras that could be taking an unnecessary toll on your pocket.

Keep track of your dollars

Once you have your budget set, keep track of each individual expense by calculating a daily expenditure and comparing to your budget. This is the best way to make sure you are sticking to your budget and motivating healthier spending habits. It can be easy to go over your budget, but these areas can be monitored and re-budgeted. When you keep score it’s easier to locate the areas of concern.

Following a budget takes time, effort, and discipline. Once you establish your budget and commit to following it, you’ll have a much better grip on your finances, benefiting you both now and in the future.

Use an online budget planner for help like this, or chat to Lou on 0414 168 327 and make your money go further.

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