Back to Basics: Starting a Budget
Paying off credit card debt, buying a house or investing in the sharemarket are all well and good but the very first step to financial security is to save money - and the best way to save money is by having a budget and sticking to it. A recent how-to guide has some good reminders about the basics of planning a budget and starting to save money, using these main steps:
- Decide you need to save money. Sounds so simple, but some people don’t believe in savings (or so they tell themselves, perhaps because saving is too difficult).
- Track your income and expenses. Write down (or store in budgeting software) every dollar that comes in and out for at least one month. Knowledge is power.
- Analyze your expenses. Take note of where too much money is going and figure out where you can make some savings. For example, many people find that hundreds of dollars a month are going on eating out - replace a few of these meals with home-cooked ones and you’ll save heaps.
- Find other ways to save by changing your behavior and asking around. Ask your credit card company for a lower rate (they sometimes say yes). Change habits like taking a taxi when you could use a bus with a little more forward planning.
- Pay yourself first. Create your new budget with the important principle that your savings come first. Transfer some of your income into a special savings account every month, before you pay bills and other expenses.
This entry was posted on Tuesday, October 7th, 2008 at 4:47 am and is filed under Budgets & Money Management. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
