Growing up with a father who impressed upon me the importance of financial stability, has encouraged me to ensure I have enough money to afford all of the things I want in life, and I could not thank him enough for this!
Budgeting always seems like such a daunting task and is often pushed to the bottom of the to do list, but budgeting can be easy and gives such a great sense of achievement when you reach your goals! The hardest part is starting. I have been squirreling money away from a young age and always had a fall back kitty “in case of emergency money” to give me security when spending. But for those who have never budgeted or saved before, it can be hard to know where to start. With the advancement in internet banking and mobile banking apps, it is easier than ever to get your finances into gear! All you need to do is start, and here is how.
It is as simple as 4 accounts.
Every day Access: This account is for your everyday spending, lunches, grocery store, a new dress, any items you would purchase day to day.
Bills: So aptly named, this account is for all of your bills and direct debits, such as gym memberships, health insurance, rent and utilities. Transferring money into bills each pay ensures you are well covered to take care of the essentials.
Mid Term Savings: Transferring a portion of your pay into your mid term savings will allow a gradual build up for an upcoming trip, a new car or handbag, some of those bigger ticket items that you want but need to save for.
Long Term Savings: This is for your future goals, saving for a house or to start a family.
Now you have your 4 accounts set up, you need to calculate how much money to put in each. There are plenty of budgeting apps and tools out there, however, the one I have found most comprehensive and useful is ASIC’s Money Smart Budget Planner. You are able to download the Excel spreadsheet and work through your spending for the year. I would suggest changing the view to match your pay cycle, i.e. if you are paid fortnightly, use the fortnightly view. It is important to initially enter the amounts you are currently spending on each item. Once you have entered all of the details you will be able to alter those not so crucial items (such as clothes, eating out and entertainment) to reach your desired savings goals.
After calculating exactly how much money you are going to allocate to each account, it is time to take action! Set up a direct debit for these monies to be transferred into each account the day after you are paid. At first seeing a smaller amount of money in your access account will be unnerving, however, knowing that you have enough money to cover all of your bills, rent and savings, you will eventually come to know this amount as your only money. I rarely look into my other accounts or consider this money “spending money”. I have direct debits set up for all of my bills and knowing the money will be there to cover these bills, as they run without supervision, takes the stress out of bill paying. You may not seem to have as much disposable income to spend on yourself, but having financial security is so much more enjoyable!
There are plenty of apps available to assist you with your budgeting. It makes banking and setting up accounts so easy. However, my last tip would be to separate your Long Term Savings account into a different bank. This way, when you are out and about and want a bit of extra cash, you won’t be able to easily dip into your savings.
I hope this will help you get back on your feet and start saving like a pro! Its better to make a start with your financial planning as soon as possible, even though the amounts saved may be small. Remember, you are responsible for your own future financial direction and the best person to support you, is you!
Kind regards,
Kate
The Corporate Life