Conducting a Budget Review at home
From 1 July, many Australians will see an increase in their pay packet. This is an opportunity to conduct a budget review at home, to make certain that you are getting the most out of your cashflow.
Budgeting
To put you on the path to building your wealth you need to start saving money. This may mean working out how to find more money. The best way to do this is to set yourself a budget.
Setting a budget is important for everyone no matter your age or how much money you have. It is especially important for people who are struggling to meet their goals or who keep building up debt.
A budget is not about just cutting expenses. It is about finding a good balance between your income and your expenses and deciding what is important to you so that you have money left over to save. A budget is not a fixed forever plan. You can continue to make adjustments over time until you reach a comfortable outcome and have a good strategy in place that will meet your goals.
There are two sides to a budget:
Your income – includes income from all sources such as salary, interest, rental income and dividends, but only include your regular income and make sure you use after-tax income or allow for tax payable in your expenses.
Your expenses – includes mortgage repayments, bills and general living expenses.
Tip
Go through the following documents to check you have captured all of your income and expenses:
Bank account statements
Credit card statements
Pay slips (for both income and deductions)
Expense receipts
Bills and insurance certificates
You could also consider keeping a diary to record all your expenses – and don’t forget all the little ones as this is where you can often make some significant savings.
Setting a budget is a simple step but sticking to the budget can be harder.
Below are ten tips for setting a good budget:
Make it realistic or you will never stick to it
Budget an amount for fun, leisure and personal expenses so you can avoid impulse buying
Save your pay rises, bonuses, special payments or tax refund
Look for small savings – for example, take your lunch to work, or use internet banking to reduce bank fees.
Pay by cash or EFTPOS to avoid credit card fees (and also avoid accumulating debt)
Reduce fees and charges – combine bank accounts to reduce fees
Put your change into a savings jar at the end of every day
Shop around and compare prices on insurance policies. Look for companies that offer discounts for multiple policies
Use lay-by options instead of debt and credit cards
Update your budget each year
Should you need any guidance around setting a budget, please contact the Maher Group team today.