Financial goal 2024: A better budget!

With the new year fast approaching, you’ve probably been thinking about what financial resolutions to adopt. While a lot of goals make sense, there’s one that you should consider as the foundational element—budgeting. 

While we’re all told to do it, it’s not always straightforward how you’re supposed to design it or how it can help you long term. 

Why budgeting is important

The most obvious reason a budget is so crucial, is the amount of savings you can make by tracking income and spending. Noting what you might be spending too much on (whether it be too much take away food or a subscription service you never use) can reveal what needs to get cut.

Another reason that budgeting can be helpful is that it could improve the interest rate you receive on a loan. Why? Because if you practice consistent saving, your lender will see you as a safer investment. For instance, if you were to take out a home loan and your home loan provider saw you consistently save $1000 a month, you could snag yourself a lower rate. 

Budgeting is also a good way of avoiding overspending. By knowing how much you should be spending, you’re less likely to make frivolous purchases. However, living under the rule of a tight budget can be tiring for some savers, so make sure you give yourself enough leeway to avoid feeling too restricted. 

Elements of a good budget

One of the first things to keep in mind with your budget is that it shines a light on how much you can spend. So, while budgets are important for balancing your income and expenses, sometimes you’ll have more or less cash left over before your next paycheck and your budget can show this. 

Some of the elements of a good budget are as follows:

1. Income/expenses: This is the bread and butter of any good budget. By calculating regular income and expenses, you can get a good idea of how much cash you have to use. 
2. Multiple savings buckets: It can be tempting to put your savings all in one place, but having multiple pools of cash can be helpful. For instance, you could keep your main savings in a high interest savings account while an emergency fund sits in another account whenever you may need it.
3. Investment funds: Some of you may want to keep a pool of cash invested. Provided it makes sense for your budget, it’s possible to keep this money in a high interest term deposit account or put it into shares. 

Overall, you should approach your budget as a guide and not as a strict set of rules. Consistency is key to realising the long-term benefits, and anything that maximises your ability to stick to the path would be beneficial. 

Looking for a high interest savings account to stash your cash into? Check out some of the providers on our savings account hub page or check out some of the accounts below…