The benefits of budgeting

Saving for a home deposit – or any financial goal for that matter – takes discipline. The truth is, it’s not having a high income that will get you what you want, it’s your spending habits. So, to give yourself the best chance of attaining your financial goals, you really do need to have a budget. Here are some handy hints about how to get started.

Where does it all go?

Finding out where your money currently goes is the first step towards enjoying the financial stability that having a good, workable budget can bring. Give yourself two weeks to record everything (yes, everything) you spend your money on. Food, entertainment, that must-have purchase, kids’ pocket money, petrol, the lot. At the end of two weeks, you’ll have a pretty clear picture of where your hard- earned dollars are going. Warning: be prepared for some shocks. Do you really spend that much on take-away coffee?

Create a realistic budget

The key word here is ‘realistic’. Now you know where your money is going, you can begin to create a workable budget that sets limits on your spending. Some bills only come in quarterly or annually, so don’t forget to add in a weekly amount that will cover those outgoings, too. That way, when the rego arrives, you’ll be prepared. But, life is for living after all, so make sure to include some funds to be put aside for treats and outings. Remember, budgets are like diets. Too strict and you’ll only stick to them for a couple of weeks and be back to square one.

What do you want?

Once you’ve worked out how much you need to live from week to week, you can confidently begin to save for short-, medium- and long-term goals. A long-term goal, for example, could be to take a two-month holiday to celebrate your 10-year wedding anniversary. A short-term goal, say, might be to have the funds for a new fridge by the end of the year. You get the picture.

Big ticket items like home loan deposits may take a fair bit of time to get together. Explore how best to boost your savings by looking into the benefits of term deposits and other higher interest accounts or putting that side hustle you keep thinking about into action. Even just a little extra will bring achieving your goal closer.

Write it down

It really doesn’t matter whether you record your budget on an Excel spreadsheet, in an old exercise book, or using a smart new app. The point is, make sure you record it somewhere. Why? So you can check it regularly and see how you’re travelling. Are you really sticking to that $200/week limit on food and groceries? How’s that savings goal going? Some people find setting up numerous free online savings accounts works wonders for setting money aside. Others find lumping all their outgoings together in one account works just fine. Do whatever is best for you.

Be flexible

No budget should be set in stone. Things happen, circumstances change, the odd financial curve ball gets thrown our way sometimes. But don’t let a slight deviation throw you off track for good. Get back into your good budgetary habits as soon as you can and you’ll soon feel you’re in control of your hard-earned money once more.