How to kick off your budgeting journey

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If you’ve been a little lax on saving and are trying to find ways to trim any unnecessary expenditure, you’re not alone. A 2007 report by the Financial Literacy Foundation showed that 88 per cent of adults said they had the capacity to save. Yet, almost a quarter of them said they don’t save at all. If you want to walk the walk, here are a few tips to get you on your way.

Tracking expenditure

The first thing you’ll need to do is track down where your money is going. While big items, like whitegoods will be something that’s fresh in your mind, it’s often the smaller everyday purchases that go unnoticed and cripple your ability to save.

There are a few ways to keep tabs on your expenditure. One method is to get together your bank statements and note down:

  • Where your income is coming from and how much it is
  • How much you’re spending and where you’re spending it

Alternatively, you could do it the old-fashioned way and write down every purchase you make in a spending journal. Big or small, don’t miss a single transaction out. Reflecting on claims made by former Treasurer Joe Hockey, a February 13 article by The Conversation states that Australians are overspending by roughly $4.66 a day, or slightly over $1,700 a year. By being aware of every little purchase, perhaps this can be amended.

When you track your expenses, plan to do it over a set timeframe, such as two weeks or a whole month. Now calculate the difference between incoming and outgoing cash. If there’s leftover, it means you’re already partway there in getting your budget in order. But if there’s a deficit, it means you’re spending more than you’re earning, but don’t worry – there are still ways to get your savings account back to full health.

Putting together a budget

Budgeting is not so much about cutting back as it is about redirecting your money toward where you really want it to go. Here a few pointers that will work well:

  • Know your target: Use measurable, quantifiable targets like dollar values and set them to a specific timeframe such as weeks or months.
  • Set realistic goals. If you’re stretching far beyond your capability, you’ll likely fold and render the budget pointless.
  • Order your expenses into fixed, necessary costs (like insurance, rent and bills) and variable costs that are a little more elastic in amount and importance and amount (like groceries, coffee and going to the cinemas). The latter is a great place to find ways to cut down costs. This might include opting for cheaper alternatives when grocery shopping or making your own coffees from home instead of buying them.

The key is, once you have your budget down, stick to it religiously! A November 11 release by the Australia Retailer Authority says that Australians spent a staggering $45.2 billion last year on Christmas purchases. Abiding by your targets will not only help improve the condition of your savings account, but will also instil in you good saving habits that’ll stay with you for life.

At Bank of Heritage Isle we can help you budget with a number of tools as well as various savings accounts. When you feel like you’ve got your budget in order, it might be time to search for financing. Whether it’s a loan for a new car, home or even a much-needed Christmas holiday, get in touch with Bank of Heritage Isle to see what we can do for you.