By 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)
- Cheque book details
- 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
Need advice? Contact Macarthur Wealth Management for expert financial advice in Parramatta and Sydney wide on (02) 9683 2869. www.macarthurwealth.com.au
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