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Does the word budget make you cringe? If you think it's just for
politicians, businesses or buying a house then think again. If you are
on a student income or on an apprentice wage and are struggling to
make ends meet, then it's time to learn some serious budgeting
techniques to get you on your way to financial stability. Budgeting
means getting your money priorities in order. To get your game on, you
need to work out:
That's it? Basically, but let's drill down to a few more
details. Are you like the rest of us and enjoy a splurge every now and
then? Budgeting doesn't mean you can't ever treat yourself, it's about
balancing your expenses so you can achieve goals.
The key to a successful budget is being honest and realistic. Be
honest about where your money goes. Most people underestimate what
they spend. A little bit extra here and there can quickly amount to a
lot. A budget can really highlight this so you can balance your spending.
There are plenty of tools around that can just about do all the
budgeting for you. Free online programs and apps include Money
Help and Moneysmart.
Some budgeting apps, such as Pocketbook, can synchronise with
your bank account and alert you of upcoming, paid and missed bills,
and keep you on track for spending and saving.
If you have Microsoft Office, then you should find a template for
budgets in Excel. iMacs also have a built-in template for creating budgets.
Once you have worked out what you are spending your money on, and
what you can realistically afford, set your own realistic spending
limit to each category on a weekly, fortnightly or monthly basis. How
you set your budget also depends on when you get paid. If you get paid
per fortnight, you could allocate a fortnightly budget for food,
public transport, and for Fido the bow-legged sausage dog. Try not to
spend more than you allocated for each category.
Every day you are faced with hundreds of food, clothing, activity and
life experience choices. Try and work out what is a want and
what is a need. Before you make a purchase, ask yourself: ‘do I
really need it'?
Work out whether you really need to get a product brand new, if you
can get it secondhand, or if a cheaper alternative will do the job. Op
shops, garage sales and sites like Gumtree and Trading Post can help you
find some goods on the cheap.
Be careful of emotional purchases; shopping when tired, hungry or
upset can result in splurging on something expensive that you don't
really need – anything from a new outfit to a holiday. Don't go
grocery shopping when hungry, and take a shopping list to avoid
impulse buying at the supermarket.
Frothy frappucinos, cold-pressed juices and smashed avo breakfasts
are popular right now. We love ‘em. And it's okay to indulge every now
and then, just keep an eye on how often you are getting takeout,
lunches and coffees, and add up the cost over a period of time. If you
are buying two coffees per day at $4 each, then you are spending about
$3,000 per year just on coffees. Maybe that's a starting point…
A rule of thumb developed by someone somewhere, says that if you can
limit your rent to a third of your income, then you are doing okay.
While this can prove to be a challenge in some locations, see if you
can create some options for yourself. Consider reducing your rent by
moving to a cheaper area even if it means a longer commute, or living
with relatives until you have completed your training.
Often reining in your spending will have added benefits: a longer
commute on public transport may allow you to catch up on some study on
the journey home. Buying less takeout can bring added health benefits;
and not buying everything new reduces your environmental footprint.
Put aside 10% of your income each time you get paid in any way. If
it's $10, then save $1. If it's $500, then save $50. Put it away into
a savings account the minute you get it and forget about it
temporarily. Check on it a year later and be pleasantly surprised.
This little trick will also help you save money for any unexpected
expenses, like having to pay for Fido's trip to vet.
Little by little every day, watch your money, save, and your
budgeting goals will come true. Only you can make it happen.