More than ever, you need to know how much money you have coming in and going out. Learn how to budget and effectively manage your money.
First things first.
Set a money goal
Are you trying to pay off debt? Build an Emergency Fund? Save up for a holiday, wedding or house deposit?
Record your income
Do some calculations and figure out how much money you earn. That’s the net amount, after taxes. Add in income from a side gig, bank interest and any income from shares that you might earn.
Track your spending
Now you have to see where your money is going. You can track this manually by writing down all your expenses over a monthly period adding in annual expenses like car rego, insurance, etc or do it on an app or spreadsheet. Be honest and put everything down.
Compare the two
Are your expenses higher than your income? Or do you have money left over each month?
If you want to save more money each month, check out our saving money tips. You don’t need to sacrifice your lifestyle in order to cut expenses. We’ve collected a variety of different savings tips to suit all families and budgets.
Create an Emergency Fund
Sometimes things come out of the blue and you lose your job (currently happening now with COVID-19) or have a dental problem that needs fixing or a car that needs to replaced. To make sure you have the money to solve these problems, start amassing an Emergency Fund. How much do you need in your emergency fund? It depends on your monthly expenses.
Rule of thumb says that at the minimum you should have enough money in your emergency fund to cover three months of expenses. So if rent, food and other bills total $1000 each month, aim to have a stash of $3000. Are your expenses higher? Then bump up your emergency fund.