Budgeting is crucial in our daily lives, and for good reason. Not only does it bring immense benefits, but its impact extends both in the short and long term. With interest rates where they are, and with today’s uncertain market, budgeting is even more vital than ever before.
It provides you and your family with financial insight as to where your money and going and highlights things you may have never picked up before. I have recently worked with a client who was having cash flow concerns. This was even though he’d been earning well above the average household income. After many discussions, I provided him with a budgeting spreadsheet that I created a long time ago (and still use now) for him to complete.
After much hesitation, he took it away and completed it… not only did he input his income and expenses for the past few months, but he completed 18 months’ worth. He mentioned that he found it to be not only an eye-opening experience but an enjoyable one.
After completing the spreadsheet, he had a clear picture of where his money was going and where he needed to make changes. Therefore, don’t underestimate the value of budgeting – it’s a key to successful money management.
I’ve listed a few points around the benefits of creating a Budget, and for those who would like a copy of my budgeting spreadsheet, please reach out as I’ll be happy to send you a blank copy, and instructions on how to complete it.
- Set Clear Goals and Achieve Them with a Budget
Create a budget to help you define your long-term goals and pave the way for reaching them. By setting criteria for how you allocate your spending, you can live within your means while working towards big-ticket items like a new car, a house deposit, or a dream family vacation.
- Avoiding the Debt Trap – Spend Wisely
Many of us tend to overspend on discretionary items, relying heavily on credit cards. To avoid this harmful cycle, utilise your saved funds instead of relying on credit to maintain your desired lifestyle, or use your credit card within your monthly allocation and pay it off in full each month.
- Building more than just Superannuation
Investing a portion of your funds from your budget is crucial for future years. Allocating a set portion of your income towards retirement and investments will help you build a strong financial foundation for your retirement years. Investing only $10,000 today and applying the average return of the share market will result in you having almost $200,000 in 30 years.
- Build an Emergency Fund
Life is unpredictable, and emergencies can happen at any time. Having an emergency fund will provide peace of mind, knowing that you have money readily available when needed. Aim to save three to six months’ worth of living expenses, which can be gradually built up over time.
- Take Control of Your Spending Habits
Creating a budget empowers you to manage and evaluate your spending habits. It helps you identify unnecessary expenses and reevaluate their cost/benefit. By rethinking your approach to spending, you can realign your financial goals and set yourself up for long-term success.
Want to know more?
If you’d like to discuss any of the content in this article and how it may impact to you, please call Matt Tuton on 07 3709 8485.
To make an appointment, please call 07 3709 8485 or email email@example.com.
Director of Financial Services
MBA, GradDip FP, FIML, SA FIN, AFP®. ASIC# 275713
Financial Planning advice is provided by Thesan Private Wealth Pty Ltd, ABN 54 661 639 247, Corporate Authorised Representative #425962 of TFS National Pty Ltd, Australian Financial Services Licence No. 532141. This document contains general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider if it is appropriate for you. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. Past performance is not a reliable indicator of future performance.