One of the most effective ways to keep track of your expenses and identify where you make savings is by creating a budget. When you have a running budget, you can use it to plan ahead, find savings, and ensure you are living within your means.
Budgets can come in many forms. Some may prefer to use an Excel spreadsheet. Others may prefer good old fashioned paper filing. Either way, you’ll be impressed with how your financial literacy improves, and how much more organised and onto it you feel about your money, when you establish a budget.
If you are wanting to create a budget for ongoing use, we have gathered our best tips to help you get started with budgeting!
1. Note Your Expenses
It’s important to note where your money is going each month. For example, note down your living expenses such as your rent or mortgage, your utilities such as power, broadband, and water, and other bills such as your mobile phone plan, any insurances, and any personal loans or credit cards. Don’t forget your groceries!
Be sure to also add any leisurely expenses such as streaming subscriptions and gym memberships.
2. Track Spending
To get an idea of your spending habits, try tracking your spending for about a month. This is a good way to see where you may be spending unnecessary money, and can help you identify where you could button back. For example, you may have a subscription to a streaming service that you don’t actually use and could therefore, cancel.
3. Be Realistic
Make sure the money you are allocating for each month is within your means. You don’t want to overspend, and have to dip into your savings, or max out your credit card and have to pay interest because you cannot pay off the balance in full each month. The same rule of thumb applies to any savings. When you determine how much you want to save, make sure you can realistically do this. That way, you are setting yourself up for success!
4. Make it a Game
As humans, we are designed to repeat behaviour when that behaviour is rewarded. For example, when a child is praised for sharing their toys, they are more likely to do it again. The same goes for your budget! Tap into the power of psychology by encouraging yourself to keep going with your savings. For example, set yourself milestones. Each time you hit a milestone, give yourself a small reward! This is a great way to keep your budgeting habits a positive experience and motivate you to keep growing.
5. Compare your Bills
You can save a lot of money on your bills by comparing. Here at NZ Compare, we want to help Kiwis save money by making better decisions with their finances. Our user-friendly comparison platforms are designed to make it easy and quick to compare your broadband, power, mobile and other finances such as mortgages, loans and insurances. When you compare on a regular basis, you can find better deals and switch to save hundreds of dollars per year.
Compare within minutes, for free, and without bias, and watch your budget flourish!
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