BUDGET. Six little letters that strike fear into the heart of even the most grizzled and savvy financial buff. It’s a fact: most people hate budgeting because like dieting, it becomes all about what you can’t have. One is forced to self-deprive, ruthlessly curb expenditure and filter out fun.
And when we put too much focus on the can’t-haves, sooner or later we end up binging. Whether it’s over a packet of double-coated Tim Tams or three pairs of must-have designer shoes, after a blowout we’re left clutching a measly pile of loose change and wondering how it all went so horribly wrong.
But budgeting doesn’t have to be all doom and gloom. In fact, it can be far easier than you think! All it takes is a shift in perspective. Stop thinking about budgets–they’re tiresome, constrictive and more often than not, entirely ineffective. Instead, take our advice and think spending.
It’s all in the perspective. Shift yours in 6 easy steps:
1. Money in, money out.
Start keeping a dollar diary. Get yourself a snazzy little notepad and whip it out whenever you spend. No matter the expense–be it big or small, necessary or unnecessary, write it all down.
It might feel (and look, at times) excessive, obsessive and miserly, but this step will make you aware of your spending. You’ll start to notice important trends, corners that can be cut, special treats that are perhaps becoming a little too regular.
Most importantly, by becoming conscious of your spending habits, you’ll take back control of them.
2. Draw up a spending plan.
This is the fun part. Go for a virtual shop and figure out what you’re going to spend money on in the next year. I’m not just talking about the fixed expenses: rent, transport, utilities and food. Variable expenses are included too: what do you want? How much do you want to spend on entertainment, clothes, gym visits? How many nights a week do you want to eat takeaway, will you take a trip to Fiji, what online shopping site have you been neglecting recently?
The total amount your shopping comes to constitutes your spending plan (not the word that rhymes with “fudge it”.) The next steps will help you meet it!
3. Pay yourself.
It’s all too easy to spend your pay all too quickly. To prevent this, before next payday set up a high interest savings account. Arrange an automated cash transfer so that when your pay comes in, a portion will be siphoned off far beyond your spend-happy reach.
Say goodbye to post-payday poverty, and hello to a neat little nest-egg! This nest-egg can help pay for the bigger items in your spending plan, or it can go towards Step 6.
4. Pay for the essentials.
Attend to the vital items in your spending plan. These are the boring, regular, everyday expenses, but they are necessities and need to be dealt with first.
(And no, tickets to the footy aren’t necessities. Neither is that complete box set of The West Wing. We’re talking rent, food, utilities–the fixed items in your spending plan.)
5. Spend the rest!
Your hard-earned can now be spent on everything else in your spending plan! Splash out on that night out, those jeans, a haircut in that swanky place with the heavily pierced staff and the pop art on the walls. Treat yourself to a facial, those tickets to the footy, and throw in a meal at that new Thai place downtown.
Cut loose–this money is all yours for the spending!
6. Have a goal.
Everyone has a dream. Perhaps you’d love a zippy new car, a designer puppy (I hear puggets are in this year), or maybe there’s a little terrace house in a leafy inner-city suburb that is calling your name.
Whenever you’re tempted to stray from the path of fiscal righteousness, stand your ground. That dream ain’t gonna become reality through poor or lazy spending habits.
Most importantly, it won’t be achieved by deviating from your spending plan. So stick to it, and see what you can achieve!
MORE in this month’s Moneyzone:
There are so many options out there for home loans and savings accounts – have you shopped around recently? Here are some of our top picks
We’ve analysed all the rewards card programs currently out there, we’ve trawled through all the data. Now’s the big reveal: which are the best rewards cards on offer?