Many Australians struggle to manage their spending and it’s a common cause of stress. It’s also a common reason that people struggle to retire wealthy.
The good news, though, is that with a little preparation and discipline it is possible to fix the problem and take away the worry of not being in control of your money.
It’s often a good idea to have three separate “buckets” when it comes to managing spending. One is the “Bills” bucket, from where all regular and known bills are paid. (Think loan payments, rent, car rego, insurances, phone bills, electricity, subscriptions, gifts and the like). The second bucket is the “Living costs” bucket. Such items as food, petrol, clothes, sport, going out and other discretionary spending are covered from this bucket. Finally, there is the “Saving/Investing” bucket. It is here that money is used for saving (short, medium and long term) and investing.
Of course this sounds easy. Without a budget, though, it’s almost impossible to work out how much to regularly put into each bucket.
Many people think of “budget” as a dirty word. Sure, it can be a little confronting to work through how you actually spend your money – there are always a few surprising findings – but it’s necessary in order to fix the problem.
And it’s not as hard as you may think.
A good financial planner can help you with the right tools to work through how much you need to spend on each of the items in each of the buckets. These tools can be as simple as a free excel spreadsheet or as complicated as a complex software system. One of the keys is working out which system is right for you.
Once all the costs of “Bills” and “Living” are understood through completing the budget, the difference between them and your income is essentially how much is available for “Saving/Investing”. i.e Income less “Bills” and “Living” equals the amount that can be “Saved/Invested”.
From there a simple banking structure, coupled with a little self-discipline and accountability, will open up the possibility of really being in control of your finances and building real wealth.
For advice or assistance on setting up your budget or banking structure, give the team at Steve May a call and start a conversation today.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
