How to budget and save money

When it comes to wealth management and wealth creation there are three golden rules. Spend less than you earn, Always plan for the future and Make your money work harder. Here is my list on how to spend less than you earn through budgeting.

1)     Set some realistic goals and write them down somewhere easily visible.

Think about why it is you want to budget and save money, then put a time frame on it. For example, are you looking at paying off your credit cards or go on that overseas holiday? Great, so when would you like to achieve this by?

2)     Learn where your money is currently being spent.

This is a judgement free zone so relax. Go through your bank statements, use online software or create an excel spreadsheet to see how much you spend on bills, how much you spend on luxury expenses and how much you currently save if any.

3)     Choose the right bank accounts

Competition amongst banks is fierce and an ideal time to see what is out on the market. Things to consider are low fees, high interest rates on transactional accounts, user friendly online banking and with smart budgeting technologies, for example the AMP Bett3r accounts.

4)     Setup your banking to automatically split your income into three manageable accounts

The pay account is used to pay all of your mandatory expenses such as groceries, electricity, loan repayments, etc. Depending on your situation this could account for 50-60% of your income.

Your savings account is used to grow your wealth over time and provide you with a financial safety net reducing the need to apply for further debt in an emergency. Depending on your situation this could account for 5-20% of your income.

The spend account is for lifestyle expenses such as eating out, clothes, coffee, entertainment etc. Depending on your situation this could account for 20-35% of your income.

5)     Avoid over spending on your credit card.

A credit card is easy to obtain but also highest cost debt on the market. Unless you are in a financial position to pay out your credit card every month do not purchase anything on your credit card. It will blow out your budget and your financial goals.

6)     Track your spending habits.

Using the latest budgeting technologies such as Money Brilliant it has become easier than ever to track how you are progressing with your budgets and if you are on track to meeting your financial goals. Ideally you want to minimise your bills and luxury expenses while maintaining an enjoyable lifestyle and increasing your savings capacity.

Budgeting is a bit like sports, easy to learn and hard to master. As a Brisbane Financial Advisor, I can help you get clarity around your future, your options and the next steps in plain English. Book an appointment today to learn more.

What you need to know

Constancy Wealth Management Pty Ltd ABN 51 168 427 361 trading as Constancy Wealth is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.

This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This post contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information