The first step towards financial freedom is creating a budget, and you can do this after getting a clear understanding of your financial situation. And if you’re one of the 75% of Australian’s currently in debt, it might be a good time to sit down and start tracking your expenses, as the cost of living seems to be rising weekly.
We are passionate about the appropriate use of our fast finance loans at Yes Loans, and our team of car finance brokers is here to help you put in the hard work and create your first budget. This process will help you take control of your finances and highlight the areas you can cut back or, better yet, where you can save.
Read on for Yes Loans’ ultimate guide to budgeting and expense tracking in Western Australia.
Failing to plan = planning to fail
- Not sure where to start with your budget? The first step is establishing a goal.
- Not sure what your goal is? Take a moment to consider what you are hoping to achieve by tracking your expenses.
- Are you tired of living paycheck to paycheck? If you’re one of the many people having difficulty paying bills on time, tracking your expenses can help you change your behaviour.
Try to be as honest as possible and set realistic goals.
Choose a budgeting method
A simple internet search will bring up all kinds of templates and apps to help you create a budget. Or you can keep it simple and start with a pen and paper. There’s no right or wrong way; you just need to find something that works for you.
Budget frequency
Looking at your annual expenses can be overwhelming, so we suggest breaking them down to align with your pay cycle. Convert your expenses to match that cycle – you can do that by adding up the previous year’s bills and dividing them by 26 weeks, so you know how much to allocate to bills every pay.
Creating a budget
Learning how to budget takes time and practice. Follow these steps to create a successful budget.
- Start by working out your annual income: have a look at last year’s tax return, or work through your bank statements for the last twelve months to see how much you earned. If your income varies from week to week or month to month (due to factors like casual work or overtime), we suggest underestimating your income rather than overestimating it.
- Work out your monthly expenses: add up everything you have spent on regular expenses (credit card, home loan or personal loan repayments, utility bills, rent, groceries, insurance, transport expenses) along with any direct debits (mobile phone bills, gym memberships or streaming services). Look back through the last twelve months of bills to get a clearer picture. Try not to leave anything out and try not to be too shocked when you see where your money is going. Go through all your subscriptions and cancel any you are no longer using.
- Define a savings goal: a savings goal can help motivate you to change your spending habits. While your income must cover your expenses, it’s nice to include some room for savings.
Overspending
One of the easiest ways to identify where you are overspending is by separating your expenses into essential and discretionary spending.
Essential spending: Find savings in your essential spending by renegotiating bills or refinancing debts, shopping around, or switching providers.
Discretionary spending: prioritise what is important to you, ranking this type of spending from most to least important, then cut spending from the bottom up. The aim is to consolidate or pay off debts and trim your spending to save more than you spend each month.
Create a monthly budget
Now that you have a good idea of your income, expenses, and savings goals, you can create a monthly budget. Allow some wriggle room for discretionary spending if possible – you don’t want to feel too restricted, or the budget will fail. Enjoy the occasional treat, which encourages you to stick to your budget.
Sticking to a Budget
Now you’ve created your budget, the real hard work begins. Having a budget is one thing, but sticking to it is another. Your goals are realistic and affordable, so you should stay motivated to stick to your budget. But – and it’s a big but – you need discipline and commitment.
Tracking your budget whenever you get paid and update it if your circumstances change. If interest rates increase or you have a new income stream, you must reassess.
Regular budget check-ins help keep things on track. After three months or so, review your budget and see if you need to change anything. Keep checking in every quarter to ensure you’re staying on track.
Debt consolidation
If you want to get control of your budget by rolling outstanding debts into one personal loan, consider applying for fast finance with Yes Loans.
Should I get a loan?
You can start taking control of your finances by applying for a personal loan. If you have a financial emergency or need some extra cash for purchasing a car, planning a home renovation, or taking a trip overseas, a personal loan can help get you on your way.
Choose Yes Loans for your fast online Personal Loan
Talk to Yes Loans car finance brokers to learn about our fast, efficient personal and car loan options. The sooner you apply, the sooner you’ll have the money! Our personalised loans come with a range of options and loan protection insurance. Once you have used the loan calculator, contact one of our personalised loan experts or apply directly for fast, efficient pre-approval.
Check out how Yes Loans can provide you with the loan you require. Call us today.