5 ways you can manage the household budget better
It’s a tough time for hard-working Australians right now. The cost of living continues to rise while wages remain the same. Bills, mortgage repayments and trying to top up your superannuation accounts can seem like insurmountable tasks to best.
In fact, recent research conducted by Finder has found that half of all Australians would run out of money in under a month if they lost their job. Furthermore, AMP Bank’s recent research into Australians’ saving habits has shown one in five Australians aren’t saving any of their monthly income, and are instead living paycheck to paycheck.
However, with a little planning and by making conscious decisions about how you spend your money, you can make managing the household budget a little easier and less stressful. Here are six top tips from AMP Bank’s Adrienne Smith that will help you move towards your goals:
#1 Set goals
“Having goals to work towards will help you focus and remain motivated to limit your spending and protect yourself against the unpredictable,” says Adrienne. “Start by identifying broad, non-financial goals that relate to your personal priorities, such as security and freedom. Then, narrow these down to relate to financial outcomes such as saving for a wedding, purchasing a car or saving for your first home.”
#2 Embrace the budget
“The first step to meeting your goals is to set out your budget. To do this, you need to identify your monthly expenses that you cannot live without, such as rent or mortgage repayments, bills, groceries and transport costs,” says Adrienne. “Then you can look at the amount of left over money that could go towards savings and non-essential expenses such as dinners ror takeaways, gym memberships, beauty services and retail shopping.”
#3 Replace spreadsheets with apps
“There are plenty of smart bank accounts and apps that can help you to take control of your finances, with far greater accuracy than having to rely on manually updating budget spreadsheets. These apps retrospectively analyse your spending, to help you understand where your money is going, giving you better insight into your expenditure.”
“By acknowledging where your money is going each month, you can then figure out where you may be overspending, then make some small tweaks to your lifestyle and start to grow your wealth.”
#4 Split up your accounts
“Once you understand your critical expenses, it’s time to set up a way in which to better control money and get on top of your spending. The best way to do this is to split your accounts into three parts.”
#1 Pay. “This is the account that covers all your critical bills. It is recommended that you set up all your income to pay into this account, ensuring you always have the money to cover any vital outgoings. This includes your salary and/or pension payments. Always leave a buffer in this account to cover any unexpected costs or unusually high bills.”
#2 Save. “The next step is to allocate some of your left-over income into a savings account (preferably one with high-interest). Doing this first ensures you are putting money aside to meet your financial goals or have a safety net for unexpected costs.”
#3 Spend. “This account is where your fun money lives. Once you’ve allocated funds to Pay and Save, the rest can be used however you like. But remember, once it has gone, it has gone.”
#5 Prioritise savings
“Saving is critical to ensure you can live the lifestyle you want. Not only can it act as a safety net but it is also the account that will pay for your next holiday, afford that new home or buy that new car you’ve had your eye on.”
“Immediately transfer some money into your savings account as soon as you’re paid. This direct transfer could be anything from $500/month to $20/month depending on your own personal financial situation. The key to making this money work as hard as it can is to find a high-interest savings account and let compound interest work its magic.”
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