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- 3 minute read
Some people freak out at the thought of setting a household budget but it doesn’t have to be that scary. I mean what are you afraid of? Are you afraid that you are going to see how much you could actually be saving as opposed to what you actually have saved? Well if that’s what it takes to change your spending / saving habits then that’s a good thing right?
Now some people believe that setting a budget is about restricting your spending but I don’t see it like that. How many times over the past few years have you heard the phrase ‘knowledge is power’? Well if you know where your money is going you have the power to make better decisions about your money. It’s a win / win situation!
I have worked in the finance industry for many years and have been setting myself budgets since I was in school. Budgets are not a set and forget task, they change when your circumstances change and you can use them as a tool to see where you can make changes if you want to save a bit extra for something special (my guilty pleasure that I spend my extra money on is travelling).
If you don’t know how to get started there are a lot of resources out there but one book I have read which I found explains things in very simple, easy to understand language is The Barefoot Investor.
Scott Pape has a very relaxed view of finances and shows that it is not a subject to be avoided. He has very practical advice on how to save but also that you should not be afraid to enjoy your life. How refreshing, I mean we work hard so why not enjoy life too!
If reading books or creating your own spreadsheets aren’t your thing there are many various apps available to download which can make it really easy for you too. Another great resource to help you set up a budget is www.moneysmart.gov.au. To get started on your most basic type of budget you will need to know what your income and expenses are. Next you will need to decide for what period of time you will calculate your budget over, (ie if you get paid monthly you may want to convert all your expenses to a monthly average therefore, if you pay a particular bill quarterly multiply it by 4 which will give you the annual figure and then divide by 12 to get your monthly conversion figure). If you’re confident enough with spreadsheets you can set it up so that it automatically calculates it for you when you enter the figure.
Once you have calculated your income and expenses for the period you should have an amount remaining which is your disposable income for you to decide what you want to do with – save, spend, travel??
Another way to look your budget is by taking your income and dividing it up for particular purposes – a certain percentage goes to bills & living expenses, another percentage to savings another to spending. This style is explained fully in The Barefoot Investor.
Alternatively, book a session with me and I can step you through creating a simple budget.
Now some people believe that setting a budget is about restricting your spending but I don’t see it like that. How many times over the past few years have you heard the phrase ‘knowledge is power’? Well if you know where your money is going you have the power to make better decisions about your money. It’s a win / win situation!
I have worked in the finance industry for many years and have been setting myself budgets since I was in school. Budgets are not a set and forget task, they change when your circumstances change and you can use them as a tool to see where you can make changes if you want to save a bit extra for something special (my guilty pleasure that I spend my extra money on is travelling).
If you don’t know how to get started there are a lot of resources out there but one book I have read which I found explains things in very simple, easy to understand language is The Barefoot Investor.
Scott Pape has a very relaxed view of finances and shows that it is not a subject to be avoided. He has very practical advice on how to save but also that you should not be afraid to enjoy your life. How refreshing, I mean we work hard so why not enjoy life too!
If reading books or creating your own spreadsheets aren’t your thing there are many various apps available to download which can make it really easy for you too. Another great resource to help you set up a budget is www.moneysmart.gov.au. To get started on your most basic type of budget you will need to know what your income and expenses are. Next you will need to decide for what period of time you will calculate your budget over, (ie if you get paid monthly you may want to convert all your expenses to a monthly average therefore, if you pay a particular bill quarterly multiply it by 4 which will give you the annual figure and then divide by 12 to get your monthly conversion figure). If you’re confident enough with spreadsheets you can set it up so that it automatically calculates it for you when you enter the figure.
Once you have calculated your income and expenses for the period you should have an amount remaining which is your disposable income for you to decide what you want to do with – save, spend, travel??
Another way to look your budget is by taking your income and dividing it up for particular purposes – a certain percentage goes to bills & living expenses, another percentage to savings another to spending. This style is explained fully in The Barefoot Investor.
Alternatively, book a session with me and I can step you through creating a simple budget.