By Camina Chin
It sounds like a scary, boring, depressing word but it's amazing how much money you can save just by creating a simple budget.
Okay, here's how I work my budget and the type of advice I give to people. Of course it only works if you earn enough to live on, so Step 1 is all about figuring out whether you do or not - and if so, how much is 'spare'.
First calculate how much you spend per pay/benefit/allowance period (eg weekly/ fortnightly/ monthly) on things like rent, groceries, electricity, phone etc (everything you need to live day-to-day). Then add in transport costs, lunches, entertainment (alcohol, movies, videos, pool, magazines, whatever applies) as well as clothes, hobbies, clubs, hire purchase agreements, lay-bys etc. Now you should have a figure of how much you pay out each pay period. Be honest, realistic and even a little generous in order to account for unforseen things. Next, add on about $10 per fortnight to cover gifts for birthdays, weddings and so on.
Subtract this amount from your income. The amount should equal zero, or hopefully more! This means you have enough to cover your expenses and ideally some money left over. If you end up with a negative number, you are living beyond your means. You may have to consider increasing your income (legally!) or sacrificing part of your lifestyle that is not vital to your survival. Amazing savings can be made in areas like groceries, electricity, lunches, entertainment, & clothes with slight changes to the way you do things. This could be as simple as looking out for specials or bargains, drinking and shouting less, (spending other people's money ha ha), or learning to do or make things yourself. The aim is to get to a point where some money (even if it is just a little) can be put away.
Think of your money to be put away as a "bill" to yourself . It must happen - it's a serious payment.
You have to find a reason to save - whether it be emotional, logical, or for survival. It could be travel? Those clothes you want? A lounge suite? Courses? Your ultimate dream? Pick something that you're excited about and really want to achieve. It'll make a huge difference to your motivation if you spend at least half an hour on your reason to save. Collect brochures from travel agents and make a poster about where you want to go, or go car shopping and cut out the ads - "research" your dream. You can even put cut-out pictures in your wallet. Doing this helps to remind you during the week when you're getting tempted by that awesome skirt or DVD player why you are NOT going to buy it!
Figure out how much money you can afford to put away each week/month after you've paid your bills. Set up an Automatic Payment on your bank account to take it out of your account on the same day as your pay goes in. Put it in a high-interest savings account that doesn't have easy access; for example one that doesn't come with an eftpos card. This way you have your living and playing money in one account and your savings safely tucked away in another.
If possible, set up Automatic Payments for essential, regular things like rent to go out on your payday so that you can never get behind by accidentally spending it.
Take out enough cash to cover lunches, movies, transport etc for each week and only spend what is in your wallet. That way what is left in the account is strictly for bills and emergencies. You also save on eftpos transactions this way!
Good luck, and happy saving.