Tracking where your money actually goes can make revealing reading.
ASIC’s 2012 consumer-spending figures show the average household spends $69,000 a year: Australians splash $78.4 billion a year on their cars, compared to just $2.2 billion on public transport; almost twice as much on gadgets as on fashion; and four times as much on beauty products and services as education.
To budget successfully it’s important to make your budget and spending limits realistic. MoneySmart has a range of suggestions for reducing outgoings without driving yourself to the point where you get fed up with the whole thing – a danger that’s highlighted in its advice and tips.
When you set out your budget and savings plan, think about what saving that money will achieve – list your goals.
The key to any successful budget management is to also work out your goals and plans. It’s much easier to trim spending or be more determined re-negotiating insurances or even your mortgage when you know what those savings will achieve. Tying your savings to a goal makes sense. If you know the savings will reduce your Mortgage or see you heading off on that holiday sooner, you’re more likely to stay on task.
RMIT’s women and money survey found that providing for family was most women’s main financial priority, but women’s incomes are most likely to be reduced when they start a family. There’s also caring for ageing parents thrown into the mix that can impact on income, savings and finances.
The best way to stay in control of your finances, is to build savings and investments as early as possible. Part of your monthly budget should include a regular savings amount.
Around 10 per cent if often given as a ‘rule of thumb,’ paid through a direct debit or regular BPay into a separate savings account. However, as everyone’s circumstances are different, it may be worth seeking your own independent financial advice.
- Do your own financial health check, listing all your income and expenses, using a tool such as a budget planner
- Decide your immediate and longer term financial goals, and consider getting some financial advice to help you do this
- Look at how you can trim spending to save more
- Set a weekly or monthly budget with spending limits in key areas. Use a diary or the MoneySmart TrackMySpend app to help you stick to these
- Set up a direct debit to put your savings into a separate account