Step 1: Build your financial confidence
The first step is to take a close look at how much money you have and where your money is going. You may have a rough idea of where your money is spent, but without clearly mapping out your current cash flow there may be many small transactions that you simply forget about and aren’t accounting for, which add up over time.
With a few adjustments you’ll be in a much stronger position when it comes to your spending decisions. You’ll be able to see clearly where changes can be made and set yourself spending limits.
Try tracking your spending over a week, recording every cent you spend and where. This can be recorded in a notebook, your smartphone or there’s a number of free Apps out there you may wish to use.
If a week seems overwhelming, try a couple of days. The idea is to get a good indication of the everyday purchases you’re making, plus the ones that sneak in that you may not notice, such as an App subscription or daily coffee.
Step 2: Create a budget
Now that you can see where your money is going the next step is to create a budget and begin to map out where your money needs to go, and when. This will help you get a clearer idea of your financial priorities so you can take control of your spending, and savings. If you are in debt, ensure repayments are incorporated into your budget.
You may like to begin rounding up your expenses. It’s a much safer option to over compensate than underestimate your expenses. Any extra dollars will give you some ‘wiggle room’ if any unexpected expenses were to come up. If you have any debts, you might consider putting any extra dollars out of your budget towards them.
Your budget may be monthly, fortnightly or weekly. Select the option that is most practical to you and your situation. You may choose to customise your own excel spreadsheet or use a free online budget planner like this one from MoneySmart.
Step 3: Set your financial buffer
Creating a contingency plan and setting aside some savings will give you peace of mind in dealing with life’s unexpected twists and turns.
Set it and forget it. To build your financial buffer try setting up a direct debit into an account you cannot easily access. Set it up for the day after pay day and nine times out of ten you won’t even notice it’s been taken out.
Regularly putting a little bit away will help you build financial balance. It doesn’t matter if that amount is big or small, consistency is the key. If you come into extra money, say after a pay-rise, try increasing the amount that you’re putting toward your debts before putting any extra towards your financial buffer.
To speak with Westlawn Wealth Adviser and take control of your finances, book your free, no obligation consultation with us today by:
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