Keeping on top of your savings can be a challenging process. Juggling debts, repayments and everyday expenses can leave you exhausted and unsure of where you stand financially. You aren’t alone in this scenario. In fact, the BT Australian Financial Health Index found that 32 per cent of Australians worry about being able to meet necessary living payments from month to month.
However, you needn’t feel overwhelmed. A budget is one of the most effective ways to help you understand where your hard-earned money is going. In essence, it clarifies what you can and can’t afford. Think of it like a map: It provides a clear picture of your financial landscape and highlights any roadblocks that you will need to overcome, while drawing a path towards your financial goal.
By keeping these steps in mind, you can formulate and use your budget to steer your fiscal dreams in the right direction.
Write Down All Your Expenses
The first step towards preparing a budget is to determine how you are spending your money. It’s useful to set down a timeframe for this. By collecting bank and credit card statements, receipts and bills, you can pin point how much money is going out of your savings account with relative accuracy. Of course, while there will likely be a number of fixed costs that you pay on an ongoing basis – insurance fees, rent and home or car loans, for example – but costs for things like petrol and entertainment will vary.
Honesty is the best policy in this scenario. You can estimate your expenditure for a given period, but don’t forget about small or infrequent payments. Many people make the mistake of leaving these expenses off their list, but you should include any and all outgoing sums.
There are some great resources available to help you achieve this. Whether it’s your favourite mobile app, or by spending a few minutes with our simple to use Budget Planner Calculator, you can figure out where your money is going – and where it can be saved.
List your income sources
Write a list of all your current and possible sources of income, including any gifts from parents, benefits you might receive, as well as your salary or income from investment properties. It’s important to be as accurate as possible – if you’re self-employed or have an irregular paycheck, use your judgement. Your tax returns or business statements can also be a good guide, as these documents typically display your earnings.
Balance expenditure and income
Once you have determined how much you spend and earn, you can then compare the two. It can be quite a sobering experience, especially if your expenditure outweighs your income by a fair margin. Given that 56 per cent of Australians aren’t saving as much as they would like according to the BT index, this comparison gives your the perfect opportunity to start thinking about how you can improve your money habits, work out your priorities – and figure out what you can do without.
To help you manage your money, make periodic payments on time – such as internet, mobile phone and utility bills – or simply save for an important event, speak to the team of professionals at Police Bank for our range of special saving accounts.
With a little elbow grease and a few calculations, your budget can help you work towards your savings goal in no time at all.