Friday, 20 June 2014

Taking control of your money



Image source: http://phoenixch.org.uk


It can be really tough to save any money. They say that with 2 Jews you get 3 opinions, yet when it comes to budgeting, you’ll find there’s a consensus that it’s not easy.

We’re big fans of the Money Smart website - Click here to use their budgeting page if you haven’t already to see how you’re doing.

So what can you do to get in control of your weekly budget?  For starters do you actually have a problem?  How problematic is your shortfall?  Identifying this serves multiple purposes.  Firstly if you find that you are spending significantly more per week than you earn monitoring this may help motivate you to make a change. It’s very hard to take action to change if you have no reason to find the motivation.  

Secondly, if there’s a problem budgeting helps you to gauge what degree of change is required.  For instance, if you are behind only $10 per week, you may only need to make a small change.  If you are behind hundreds each week then significant change may be required in order to balance your budget.

If you’ve identified that there’s a problem, the next step is the conscious choice to change. This may require consultation with family or friends but making this choice is a step to be applauded. Seriously – it’s a big decision so if you choose to begin the process of budgeting, give yourself credit because it’s a huge step in the right direction.

The ‘how’ to work on your budget will take time, energy and discipline. Be aware that doing nothing is a choice too.  When you decide what action is required, be sure to consider the implications of doing nothing.
When deciding how you need to adapt to your budget, as above, consider what degree of change is required.  However, it varies person to person what a large weekly shortfall actually is.  For instance, a shortfall of $100 per week may necessitate a large change for someone on Centrelink entitlements, however it not be as much of a significant change for a full time employee with an $80K+ salary.

Large change required:
  • If you need to make a significant change, you can make lots and lots of small changes or alternatively to review your most significant expenses. Here are some ways to make significant change.
  • Consider if you can afford to live where you live. If not, consider downsizing, relocating, taking in tenants (e.g. AirBnB) or renting out your parking (e.g. Divvy or Parkhound). 
  • Additional employment/significant change in work. Perhaps another member of the household could contribute to the family’s rent or expenses. 
  • Consider if you are accessing your Centrelink entitlements that you be eligible for.

Moderate change required:

  • Consider reducing expensive behaviours –e.g smoking, pay television, personal training, massages etc.
  • Consider your utilities (e.g. electricity, gas, water, home phone, mobile phone, and internet) and see for which of these you are beyond your (generally 1 or 2 year) contracts. If you switch while on contract you may incur switching fees. If you have passed your contract period you have options to switch companies or switch plans within your company. In that case of mobile phones, consider whether you may be able to save by switching from plan to pre-paid or vice versa.
Some change required: 

Perhaps you can find some ways to make minor changes e.g:
  • Consider reducing your coffees by 1 or 2 per week
  • Perhaps bring lunch to work a little more often 
  • You may be able to save a little on petrol by using public transport

In any case, change takes time but persevere because it’s worth it.
Plan your expenses around what you have available and keep in mind, that every little change adds up.
However, do your homework because making some changes may lead to other expenses.
For instance, relocating comes with removalist costs, the bond etc, so you may need to save up first, in order to save more in the long term.
 

Best of luck!
 

Please consider the above as general education that may not apply to your situation. For more personal information talk to a financial counsellor, financial planner, or an accountant.
 

JewishCare has a financial counselling service. 
Please feel free to contact JewishCare for further information  on 1300 133 660 or email: firstcall@jewishcare.com.au

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