Budgeting and Saving 101
Let’s face it – thinking about budgeting and saving is pretty uninspiring. But unfortunately, it is important. It’s not about watching every cent, but rather developing a realistic idea as to how much money you spend compared to how much you earn in order to ensure you’re able to afford the things that are really important to you.
Have a close look at your current spending habits. Think about writing down everything you spend over a week, or even better, a month. That’ll give you a good idea as to where your money goes – you might be surprised at just how much you spend on things you could probably easily do without.
The Australian Securities and Investments Commission’s website MoneySmart has a fantastic budget planner that you can fill out. It’s very thorough, so you’ll be able to see clearly where your money goes and how much you could potentially save every week or month.
Think about how you can cut out non-essential spending. There are a million ways to do this and you probably have a few ideas already. Whatever you do, don’t go to extremes – you’re more likely to give up if you set a budget that’s too tough. Remember that even cutting out tiny expenses can make a huge difference in the long run. If you need inspiration take a look at a compound interest graph. It shows how a small amount of money saved on a regular basis can add up to a fortune over time.
Experts often stress that the best way to save is to set aside a small amount of money you know you can afford and have it whisked away from your bank account every month by setting up a direct debit to a separate savings account. Theory is that if you never see it you won’t miss it (and you can’t spend it!) and that’s a good thing. How much should you save and where should you invest it? That’s up to you, but it’ll depend on your personal situation and goals – more on that later in Setting Your Goals.
Online savings calculators
Most financial institutions now have great easy-to-use savings calculators that will help you work out how much you can save over different periods of time.
The Australian Securities and Investments Commission’s website MoneySmart offers sensible tips and advice on ways to cut your costs and boost your savings. Have a look – it should give you a few ideas.
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Find a financial adviser
Check out the Australian Securities and Investments Commission’s website MoneySmart– it has loads of great information about obtaining personal financial advice and finding a qualified financial adviser. Experts often suggest you find an adviser who charges by the hour instead of receiving a commission.
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