Top 5 best personal budgeting tips, no matter what your income
A new financial year is upon us. The best way to own it is to plan now! Here are five of the best tips for making a personal or family budget, and sticking to it. Smart budgeting allows you to have enough for the things you enjoy, no matter what your age or income.
1. Work out your income and expenditure
The best place to start when you’re creating a budget for yourself or your family is to work out what comes in against what goes out each month. Write a list of your sources of income – your salary, any additional income from investments such as rental property, and interest on your bank accounts. Your income has to be factual rather than speculative, though – even if you’re due a pay rise or inheritance, don’t include them if they haven’t already happened.
Then work out your monthly expenses. Regular outgoings will include your mortgage or rent, insurance and household bills. Estimate your other expenditures, such as grocery and clothes shopping, as best you can.
Once you’ve done this, you’ll be able to have a realistic idea of where you need to make savings. You should aim to:
- Earn more than you spend
- Be able to afford occasional indulgences such as holidays, tickets to concerts or sport events, and dinner with friends
- Put some money away each month as savings and to cover the cost of emergencies
2. Make some necessary changes
This is often the most difficult part. You need to take a look at your expenditure and work out how much of it you actually need to spend. If you haven’t been to the gym for months, you should cancel your membership. If you spend a lot on clothes, could you save yourself money by shopping at factory outlets or online? Even the cost of buying your lunch each day could shock you into making sandwiches to take to work. Small savings add up into much larger amounts over time.
You can also make savings by spreading the cost of big events like Christmas over the whole year, keeping an eye out for presents whenever the sales are on. This will save you spending out drastically in December and running up a huge credit card bill in January to make up the shortfall.
Don’t aim to deny yourself all the things you enjoy; just be sensible about what you spend to avoid unnecessary waste.
3. Make sure you’re getting the best deals
If you want to stick to your budget, it’s important to continually shop around, instead of sticking with your current arrangements out of convenience or habit. Some of these changes are really easy to make – you can save a lot of money on your grocery bills, for example, by shopping at budget supermarkets like Aldi.
Visit price comparison sites to make sure you’re getting the best deals on your energy, insurance and other services such as mobile phone and broadband. Families can often save money by choosing a bundled package for their phone and internet services, as these often work out cheaper than individual contracts. You should also consider switching your bank account and credit card if you could get better interest rates elsewhere.
Remember, if you do find a better deal on any of the services you use, you’re perfectly within your rights to ask your current provider if they’re prepared to match or better it. Many of them will, to keep your business.
4. Adopt a more energy efficient lifestyle
You can live a greener, more sustainable lifestyle by making a few simple changes. It won’t just save you money; you’ll also know you’re doing your bit to protect the planet!
If you’re buying any new appliances, make sure you go for the most energy-efficient models. This could save you hundreds of dollars each year in household bills. Also, make sure you switch off all your appliances when they’re not in use, rather than just leaving them on standby, to reduce unnecessary energy use.
Make the most of the rebates offered for energy efficiency schemes. These vary between states, so check what’s available where you live. Many states now offer rebates on initiatives such as water-saving appliances and rainwater tanks.
5. Consider using a budgeting app
There are now many apps available which enable you to budget easily using your smartphone. These can be helpful because they can show you where you stand with all your sources of income rather than just your bank account. You can also set spending limits. The app will track what you spend and alert you when you approach your limit. Budgeting apps can also be useful for setting yourself financial goals and monitoring your progress.
There are a wide variety of budgeting apps on the market now for all the most popular operating systems – it’s worth doing some research to find the one that’s right for you.
Remember, budgeting isn’t about denying ourselves the things that make our lives enjoyable. It’s simply about giving ourselves a fair deal. No matter what we earn or where we live, none of us should be paying over the odds for goods and services we can get for less somewhere else. And with a little planning, you can achieve the lifestyle you want, and have a little put aside for a rainy day.
Consulting your financial adviser and mortgage broker is always a good idea!