Budgeting in a Nutshell
Aside from getting in shape, financial wellness is a classic New Year’s resolution. This year, thousands of Australians will vow to save more and spend less. This can feel like an overwhelming task, so it’s important to remember to start simple but start now! To help, we’ve created Budgeting in a Nutshell; your guide to getting your savings on track.
- Take stock of your spending.
The first step in taking control of your money is to find out how much you spend and where you spend it. Use a handy tool like the MoneySmart Budget Calculator to get you started.
- Make a realistic savings target.
How do we know what to aim for if we don’t set a target? Start with an achievable amount for example $3,000 for the year. Break this down to how much a week you need to put away ($58) and then do it. Using regular direct debits on pay day is an easy way to make sure your savings are put away at the right time, every time. Or if putting cash in a money tin is more your thing, go for it. Use whatever works for you because what we’re all about is helping you hit that target.
- Asses your situation.
Does your income minus your spending equal your ultimate savings goal? If not, re-assess your expenses and reduce where required. We’re looking for a positive result to this equation. The other option is to get around activities that will boost your income. Whether this is a side hustle or selling your unused stuff, more money means more savings!
If you still can’t reach your target savings by reducing your expenses or increasing your income, review your goal. It’s important to keep it realistic.
- Create a savings tracker to help monitor your progress.
Set up a schedule that shows how much each week you need to put away and what your savings should be up to at the end of each month.
Check your account balance against your savings schedule regularly to see if you’re keeping on track. This is an easy way check your progress and quickly shows if you’re falling behind and need to pick up your game. If you’re using the money tin idea create a weekly checklist and mark off when you add your savings in.
- Don’t forget your goal
Out of sight, out of mind is a serious issue when it comes to our financial goals. Regularly reminding yourself what you’re doing and why, will give you the best chance of success. This can be something as small as naming your savings account ie ‘Dream House Fund’ or sticking a tag on your money tin so that every time you add or take away from it, you know it’s helping or hindering your goal.
- Celebrate your progress.
Keeping a budget in check is a huge achievement. As well as celebrating when you do hit your end goal, congratulate yourself along the way. Maybe not with an expensive bottle of champagne but you should feel awesome when you end up in line or in front of your savings schedule. Even catching up after a few big weeks should be positively acknowledged.
So many things can get in the way of our savings success and lots of them are unavoidable. Don’t get discouraged! Be flexible enough to adjust to your unpredictable life but stay focused on your goal. Smash that savings goal and come out of 2019 feeling super proud of what you’ve achieved.
Written by Olivia Grant, Financial Planner on behalf of Oak Financial Planning.
Oak Financial Planning Pty Ltd ABN 78 126 751 335, trading as Oak Financial Planning is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited, Australian Financial Services Licence and Australian Credit Licence 232706.
This blog article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.
If you decide to purchase or vary a financial product, Oak Financial Planning Pty Ltd and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.