If 2020 has taught us anything, it’s to prepare our finances for when unforeseen circumstances arise. So, with the help of LCI Partners managing director, Gerry Incollingo – who has over 30 years’ experience managing the financial affairs of a diverse client base – here are the expert tips to help you get on top of your budget this year.
Record all your spending
The easiest way to set a budget is to start recording what you are spending. Work out where your money is going, which are the necessary expenses, and the difference between a ‘want have’ and a ‘must have’.
Through this process, you may discover things that you have been paying for that you forgot about. Get rid of those expenses immediately. You may also find you have multiple music and TV streaming accounts and, if you are looking to save money, try just keeping one.
To keep track of your spending, download an app like Goodbudget, MoneyBrilliant, MoneyTree or Pocketbook to record everything.
Prioritise the items
If you are trying to repay your mortgage faster, make that a priority. Prioritise your ‘must spends’ like rent, food shopping, phone bills, internet, school fees, etc. as these are the first things you need to pay for when they come up.
If you find you have extra money left over, that does not mean you should go crazy with your spending. You have worked hard for that money and have put a budget in place, so consider saving it for a rainy day – such as, I don’t know, a global pandemic?
Have a separate savings account
You should be contributing to savings on a regular basis, not only so you have money when you need it, but also for emergencies. Whether you save a certain amount every week or have a goal (for example, to save $5000 every quarter) is up to what you can afford, but do try to take it seriously.
I suggest having a dedicated savings account where you transfer the money you want to save each week, plus any money left over that you can live without. Keep that money out of sight so you are not tempted to spend it on impulse purchases.
Don’t let your money sit around doing nothing
Now that you are on top of your budget, don’t let your money sit around when it can be making more money for you. Seek a meeting with a financial advisor who can help show you the best options for your personal situation. Is it worthwhile putting your money into shares, property, a managed fund, bonds? Get your money to work for you.
Don’t forget about unforeseen expenses
Your car breaks down, your friends want to see a show, home repairs need to be done – this is why savings are important, as is factoring in the things, such as your social life, that you know you will be spending on. Be honest with what you know you will spend and be honest with the items that may come up. It will save you from being blind-sided down the track.