Organising personal finances can be a daunting task, even for financiers! Like any profession, when you do it all day for a living it’s the last thing you want to do when you go home. Right?
Fortunately there are plenty of resources online and apps available to help us with the yukky money stuff. Your bank may even have an app or online feature that will help you track your expenditure and savings.
But be prepared for some rude awakenings. Because if you’re like me, when you really work out where your money is being spent, it can be scary. A daily latte and takeaway lunch can very quickly add up to a small fortune over a month.
1 Set your financial goal
A good plan starts with having a goal. An achievable goal. To be achieved in a realistic timeframe.
What is it you are saving for… a new apartment? A holiday? Paying off bad debt? It’s easier to resist those shopping temptations when you visualise your end goal and keep it front of mind.
2 Earnings and expenditure
How much money do you earn each month? Check your payslip and write down the monthly amount. Include any other regular income sources.
Now for the scary bit… what are your expenses each month?
Make a list of all your monthly expenses in a typical month. It will help to sort these expenses into categories such as:
- mortgage or rent
- utility expenses (estimate the quarterly bill into a monthly amount)
- travel expenses such as car, fuel, opal card
- food and grocery essentials
- any bad debt repayments such as credit cards
- indulgent expenses like shoes and pay tv
If you thought that hurt, wait until step 3 😊
3 Make the comparison
Now’s the time to compare your expenditure against your earnings. Your true monthly spend versus your monthly earnings.
If you make more money than you spend, and you have money leftover each month, congratulations! You’ve got money to put towards your goal.
If you spend more money than you make each month, you’re not alone. But you do need to get your monthly budget back on track.
The good news is there’s help available to assist you. The first step is acknowledgement and you’ve done that. Now’s the time to make some changes.
Remember, keep that end goal in mind ALWAYS.
4 Change is a good thing
There’s always room for improvement.
Even if you have money left over each month, have another look at your expenses and see what you can cut back on, or improve, to increase your monthly surplus. Be ruthless and keep that goal in mind!
If your budget is in the black, and no – we don’t mean fashionably black, then consider what changes you can do to turn this around.
To cut down on monthly expenses, you may have to be more ruthless.
- Cut down on any must-haves (and shoes mostly count as must-haves) and only spend what you need.
- Review expenses and research for a better deal. Whether it’s your bank, insurance, supermarket or utility provider, by switching you may save considerable money.
- Pay off bad debt sooner than later. Making extra payments could hurt initially, but long term you’ll be relieved it’s gone.
Like most things worthwhile, it’s going to take determination and hard work. Missing out short term will reap benefits longer term. Remember your goal!
5 Be disciplined
Now you’ve reviewed your monthly expenditure against your earnings, and you’ve made some changes with your end goal in mind, stick with it!
Think of the reward of watching your surplus growing and growing and being closer to achieving your end goal. Then it’s celebration time!
Help is near if needed
Life is unpredictable. Circumstances can change, but if you don’t have a plan in place to reach your achievable goal, you could be setting yourself up for disappointment.
If you need professional help with managing your personal finances, consider contacting an accountant or financial adviser.
If you need help with debt, call the National Debt Hotline on 1800 007 007 for free and confidential advice from professional financial counsellors. The hotline is open from 9.30am to 4.30pm, Monday to Friday.