Making a Budget and Sticking To It!

Are you sick of not being able to afford what you dream of and always looking at bills with despair knowing very well that your bank account is near on empty and your wallet does not look much better?

Don’t worry you are not alone, many Australian’s struggle to make ends meet and it is not because they do not earn enough, in fact, the majority of working Australians will all be millionaires within their lifetime if they work until the age of 60.  However, the problem we often have is living outside of our means and sticking to a budget that reflects our income.

When it comes to money and expenditure most of us find it difficult to save because this often means changing our habits and cutting down on those little luxuries that we have grown to love.

In order for you to devise a plan that will allow you to achieve a high level of savings whilst maintaining a quality of lifestyle or reduce your debt you will need to establish a budget stick to it.

First and foremost grab a paper and pen.

On one side of your paper write down your weekly expenses. Include your rent, mortgage repayments, car costs like registration, petrol and servicing as well as tyres etc., along with utilities, clothing, food and entertainment. And, don’t forget insurance costs, doctors and medical fees, schooling costs, land rates and credit card repayments.

On the other side of the paper write down how much you earn per week, include all income sources like employment, investment income, child support, family allowance and any other government payments.

Add both sides up and times by 52 to give you a yearly total for each.

Now subtract your yearly expenses from your earnings. What you are left with is what you can save yearly and if you are left with a negative amount you need to go back to your expenses and see where you can cut down.

On your expenditure list there are three types of payments you make:

1.Fixed
Payments that you can not alter or influence like land rates, mortgage and rent.

2.Variable
Payments that you can influence by being more economical like water, electricity and gas.

3.Flexible
Payments that you can alter because they are made by personal choice like luxury items, entertainment and cigarettes.

Now let’s devise a budget, one that is realistic and will allow you to either save or get yourself out of a financial rut.

Write down all your fixed annual payments because you can not change these, then consider your flexible annual payments, are you spending far too much on clothing, and entertainment etc? Are there ways you can restrict your spending here? If so write down a new (realistic) amount for these.

Next, look at the things you can influence like your electricity bills etc. Can you be more cost effective? If so write down the possibilities and once again be realistic because if you set yourself goals that are too hard to achieve you will never stick to your budget.

When you have finished tally up your expenditure list, this is your new annual budget. Break this down into weekly spending by dividing by 52 and then record your daily spending habits in a note book so you adhere to this new budget.

At first it will be tricky but budgeting is about altering your lifestyle to fit your income so that you can enjoy a quality of life that is stress less and eventually attain those milestones that you thought were unachievable.

Disclaimer:

No investment advice provided to you.
This web site is not designed for the purpose of providing personal financial or investment advice. Information provided does not take into account your particular investment objectives, financial situation or investment needs.

You should assess whether the information on this web site is appropriate to your particular investment objectives, financial situation and investment needs. You should do this before making an investment decision on the basis of the information on this web site. You can either make this assessment yourself or seek the assistance of any adviser.