No matter what our income level, it makes sound financial sense to structure our spending so that we can live within our means. The good news is that with the right advice, living on a budget is a walk in the park, writes Greater Branch Manager Josh Swetnam.
Recently a friend of mine approached me for some financial advice. This happens from time to time, but this time the friend in question was a pretty cluey guy who earns a very decent wage. The thing that shocked me about the situation was that he wasn’t after tips on investing, or advice on the best loan – he wanted to know how to set up a budget for his young family. Luckily, I was able to help him out with the info he needed.
The more I thought about my friend though, it became clear I was wrong to assume he’d been lucky enough to have received the same advice as me. The words of my economics teacher began to ring in my ears:
“Budgeting is common sense – turns out; not so common.”
We should all be able to safely manage our money to ensure we’re providing for our future and being financially responsible. But as we’re all different, with different levels of knowledge, I thought it best to pass on some budgeting advice which has held me in good stead for many years.
- Follow the golden rule – if you take one thing on board, let it be this – don’t spend more than you earn. You do this, and you’ve pretty much got budgeting down pat. Unfortunately so many of us fall at this first hurdle.
- Cut Bad Habits – Another little thing which you can do to improve your incremental gains. Depending on what you think is a bad habit, simply give it up. Give the pub a miss and pocket the cash. Cook at home instead of going out for dinner. Limit the transaction fees on your bank account by withdrawing cash when you need it. Walk the extra block to your banks' ATM and avoid transaction fees.
- Plan ahead – Get the lay of the land – calculate your household income and minus your essential expenses. Whatever you have left is yours to play with – make this figure stretch as far as it will go. And if you are going to set up a budget plan, be honest and stick to it. You are only cheating yourself.
- Focus on Savings – While handling your money pay-to-pay should be your priority, you shouldn’t ignore any chance to put aside some savings. Even the most work-hardened of us like a holiday from time to time, or a new car, or something for our kids. Opening a high-interest Savings Account like The Greater’s Bonus Saver is ideal – these accounts reward you for making multiple deposits and no withdrawals with a higher interest rate on your savings.
- Consolidate and pay debt early – if you have accumulated debt, regardless of the source, you should be looking to pay it off as soon as possible. Avoid making minimum or late repayments as this could actually end up prolonging the life of the debt through fees and interest. And if you have multiple debtors with different rates, consolidating them into one loan will help you get a handle on your repayments and will make life easier. A Greater Personal Loan might be just the ticket for those looking to consolidate. Check out our rates today and see how we measure up
- Be Flexible – This last rule may seem counter-intuitive, but it is realistic nonetheless. While you should try to be as stringent on yourself as possible in sticking to your budget, you need to understand that life doesn’t always follow our best-laid plans. Things happen. We need to be able to adjust our budget in the event of an unforseen home repair, or an accident or redundancy in the family. This is where the importance of having savings put aside is made clear – having that savings buffer may relieve some of the pressure an unforseen event will bring.
These few simple tips are great if you’ve never had to set up or follow a budget before. It’s hardly rocket science, but they may just save you a lot of money.
If you’ve caught the budget-bug and would like to get a little more in-depth advice, The Greater has partnered with Bridges to provide customers with industry-leading Financial Planning. To make a complimentary, obligation-free initial appointment to meet with a planner, why not:
Got any great budgeting tips you think we’ve forgotten to mention? Why not share it in the comments below?