When you hear someone say budgets are boring, chances are they’re struggling with debt. And yet budgets equate to financial freedom because the simple act of paying attention to money over the long term is one of the easiest ways to build wealth.
Think of a budget as a realistic plan – based on income, expenses and goals – that will get you out of debt. By reallocating money to where it matters most, only then can you stay on top of finances and start putting funds towards future projects.
Sure getting started can be overwhelming, but it’s worth the effort.
Here’s 7 reasons why.
- You’ll stop living from pay to pay
- You’ll get a grip on impulse spending
- You’ll find the cash to pay that next bill
- You’ll be able to set and prioritise financial goals
- You’ll be able to build up an emergency fund
- You’ll be able to start a savings plan
- You’ll be able to live on less, and retire early
Want more reasons to take the boredom out of budgeting?
Then follow these 5 easy steps:
Track your spending
Look at money going in and out for at least a month using your mobile phone, tablet or app to track spending. There’s nothing more exhilarating than monitoring your net worth so redo your budget every six months to make sure it reflects your current income, spending and what you want to achieve. Once you are on top of your finances, you only need update a budget once a year.
Live within your means
Once you see what funds are coming in and going out, you’ll most likely need to start living within your means. This is more than just balancing your budget. It’s about spending less than you make. But it doesn’t have to mean doing without, just cutting back.
Pay down debt
Credit card interest costs big, and it stops you from saving for a major goal, like a home or that dream holiday. The most powerful thing you can do next is redirect as much of your earnings as practical to paying down debt.
Make earnings count
Allocate at least 10 per cent of earnings towards building up a savings safety net. Use direct debit or get your company payroll to split payments into three accounts — 10 per cent into savings account that earns compound interest, 45 per cent in a cheque account to cover bills/debt, 35 per cent in an easy-to-access account for living/entertainment.
Allied Investment Group advisers specialise in assisting clients take control of their finances so they can have more choices and security now and in retirement. By following these steps, you’ll be on your way to financial freedom and building wealth for the future. It’s never too late to get started. Call 1300 886 149 to put your budget plan in place.