Laboratories Credit Union Limited

Budgeting Tips

Written by Christopher Sharpe

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For many Australians, budgets are akin to New Years’ Resolutions; easy to start, and difficult to maintain.

As the national household debt level rises to over $1.5 trillion (that’s $67,000 for every man, woman, and child), some analysts warn that our standard of living will be unsustainable. In the midst of our burdened economy, it becomes vital to have a detailed budget, or risk joining the masses in debt danger.

In order to prepare you for the unpredictable financial landscape, here are three steps to give your budget a makeover.

Step 1 – Getting to know what you spend

The first step to getting your budget in control is to keep track of where your money is going. How much did you spend on food last month? What percentage of your salary is spent on utility bills? Where did the $60 you withdrew on Monday go? ASIC’s infographic on Australian spending illustrates a visual breakdown of what Australians spent their money on in 2012.

Here are some quick tips on how to reconstruct your spending:

For the next month or two, hold onto all your cash receipts and study your credit card bills. You may be surprised about how much you’re spending.

Step 2 – Budgeting and savings

After looking at the reality of your spending habits and ensuring that your bills are under control, now is the time to set up automatic bank transfers to manage your savings.

Start by opening a separate savings account which can be linked to your everyday transaction account/s. Ideally you should be able to save at least 10% of your monthly earnings, and then schedule these funds to be regularly transferred automatically into your new savings account. According to Ramit Sethi, New York Times bestselling author of I Will Teach You To Be Rich, savings should be treated as a necessity.

“Pay yourself first,” says Ramit Sethi. “Figure out how much you’re going to save each month, and treat it like just another bill.”

Be sure to save for both short and long term goals. Is your best friend’s birthday in a month? Do you have a big wedding to attend in the coming summer? Do you want to buy a house in the next 5-10 years? A small contribution to your savings account every payday will help you be prepared for whatever comes your way.

Step 3 – Guilt-free spending

A budget isn’t meant to restrict you from enjoying small pleasures, like a cup of coffee every money. Once you’ve paid your expenses and you’ve organised a regular savings plan what you have leftover is what you can now spend guilt-free! By dedicating a couple of hours every month to working on your finances, you can enjoy the peace of mind that comes with never spending more than you can afford.

Feel's good doesn't it?

Contact us today to discuss how we can help you with your budget.