Does the thought of budgeting send a shiver down your back? Home loan comparison show you the easy way!
Creating a budget doesn’t have to be ugly, and it doesn’t mean cut to the bone – its’ simply taking a look at your finances, working out what you’re spending on food, housing, entertainment etc. If you have ever looked at your bank account and wondered where the money has gone – again – this kind of good hard look can help work this out and plug any holes, so to speak!
A budget is a great way to make your money work harder for you, reduce waste, and turn the excess into something meaningful – for you.
I often talk of a wayward husband – who will remain nameless – and who was regularly responsible for a 20 odd dollar withdrawal at a service station. By regular I mean daily. Said husband has a fully maintained company car, so what exactly was he spending around $100 a week on? Mostly junk as it turns out, when you put this in perspective it’s a lot of money. $5,200 a year to be precise – plenty to cover a good family holiday.
Here’s how to create a budget
1. Gather your financial statements. This includes bank accounts, credit card statements, recent bills and any other information regarding a source of income or expense. The idea is to create a monthly average of both your income and expenses.
2. Record all of your sources of income. Work out your total monthly income, it’s easier to work on a monthly basis.
3. Create a list of monthly expenses. Write down a list of all the regular expected expenses you incur over the course of a month, breaking them into categories so you know where your money is going. This includes a home loan repayment, car repayments and insurance, groceries, utilities, entertainment or education expenses – essentially everything you spend money on. Be honest and be kind to yourself, you need to live life and the whole exercise is wasted if it’s unliveable.
4. Find an average of your expenses. Build a picture of what you spend in an average month. Don’t forget to allow for birthdays and big events. Hopefully there’s plenty left over.
5. Take a good hard look. Firstly congratulate yourself that you’ve gotten this far! Hopefullly the result is knowing where you are wasting money, what you have left over and what’s available for you to save, and If you are in a situation where expenses are higher than income you should look at your variable expenses to find areas to cut.
There are tools to help you do this also – ask us for our simple budget calculator, or see if your bank has a budgeting tool built into their online banking – that’s got to make the job easier!
Tips to creating a budget and making the most of your money
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