![]() ![]() Now that you have everything divided into broad categories, you can go into more detail where you need to. Just call it all “other.” It’s also not an exercise to make you feel guilty-so try remember the good times that some of this spending created too! Step 3: Drill down further and choose some priorities If you work through a few categories, and you’ve accounted for 90% of your spending, don’t worry about that last 10%. Start with the big categories first, and work your way down. Just wrap these all into one: “utilities”.įinally, don’t feel like you need to account for every single dollar you spend. Same goes for things like power, internet and phone bills. That’s a lot easier than painstakingly dividing everything into separate categories. ![]() For example, you could track your takeaway coffee, lunches, meals out with friends, and drinks at bars, all in the same category-“meals out”. Keep your categories nice and broad to make the process easier. Your rent or mortgage payments will probably be your biggest category, so start with that one. Your income, on the other hand, will be pretty obvious-not to mention hard to change in the short term. Hopefully you spend less than you earn! Step 2: Get categorisingĪfter you’ve figured out how much you make and how much you spend, you can get into the details by going back to those transactions you downloaded and dividing your spending into categories. Now you have a really clear view of how much you spend against how much you earn. And if you’re paid once a month-you guessed it-divide by three. If you get paid fortnightly, you’ll divide by 6. If you’re paid once a week, you’ll divide your total by 12. So divide your totals by the number of pay periods in three months. It’s useful to find out how much you spend and earn per pay period because your pay period creates a natural “cycle” of money coming in against your money going out. Putting your transactions in a spreadsheet, or You want to find out how much you spend and how much you earn. This is a good number because it should include for those less-common, but high, expenses like dental bills and car repairs. Login and download three months of online banking transactions. The best place to find this out is through your online banking. Step 1: How much are you earning and spending?įirst off, you want to see how much you’re earning, and how much you’re spending. ![]() Let’s take a look at the ingredients for one way of creating a budget. In fact, a good budget should allow you the money you need to spend on the things you enjoy. It’s easy to think of a budget as a real fun sponge, where you’re meticulously tracking every single cent you spend, trying to spend as little as humanly possible. Even if you end up not making any changes, it’s still worthwhile to go through the budget process now and again, so you at least know where your money’s going. It’s also a great opportunity to prioritise your money into things that you enjoy and that make you feel good. This is a lot more difficult if you don’t have a budget! If you know where your money is going each month, it’s a lot easier to make adjustments to help you reach your financial goals. ![]()
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