It's absolutely no secret that the rising cost of living is putting severe strain on many households. Now more than ever, to keep your head above muddy financial waters, it's important to know where your money goes.
The mere word "budget" is enough to have many log off this blog immediately, but honestly, it's the only way to make any sense of your household finances and start clearing some debt.
Yes, it's tedious and time consuming and boring - but so is sitting in traffic but it has to be done to get where we want to go.
So, if you're ready to take on the cost of living, the first thing to do is get yourself a budget planner.
This could be as easy as a blank notebook, pen and calculator or for those a little more tech savvy - an online spreadsheet.
There are some terrific inexpensive or free budget templates online - I use the Yearly Planner by Coplenty utilising Google Sheets. It is a cinch to use and has some cool little graphs built in to gauge overall spending.
Next up is start logging every expense ... and I mean everything! Don't cheat - you're only cheating yourself. Missing a $4.50 flat white every day will mean $1642.50 is missing from your budget each year. Not logging your once weekly petrol fillup of $65 adds up to $3380 over a year which is a fairly hefty chunk of your expenditure.
Budgetting is habitual and once you get in the swing of jotting down your expenses, it becomes second nature. If you use a card - credit or debit, to pay for your expenses, just use your monthly statement to record your expenses. For cash expenses, use a little notebook to keep track until you can get all of the data into your budget planner.
Next up, tally up any money incoming. This could be from regular payslips, side hustles, dividends, bank interest, child support, welfare payments, tax returns - any money that comes into your household.
Once you've got all of your incomings vs your outgoings tallied up, you'll see where the shortfall lies, or alternately, any profit made across the term of your budget. Having all of your expenses as one grand total may motivate you to trim an area of spending. It could mean reducing the amount of times you go out to eat and have 'leftover nights' instead, re-selling or putting clothes on consignment before buying a new item, not going shopping when you're hungry, using a toy library instead of buying new toys for the kids, utilising the public library instead of buying books. There are thousands of ways to cut costs.
Sometimes though the budget is trimmed to the bare minimum we need to actually create more wealth through other means. It might be a case of renting a spare room, asking for some overtime hours, taking on a 2nd or 3rd job for a period of time, starting a side hustle with low overheads, do some dog walking, take on ironing or sewing, or simply sell some of your stuff you no longer need or use.
It is tough going right now, but having a handle of how much you need to make to cover your annual expenses is a great way to take control over the situation. And the only way you can do that is to track your money.
Comments