Four ways to improve how you budget and save
- Be realistic—Living to a budget is not a ‘crash diet,’ it’s a healthy balance where you shouldn’t deprive yourself or over-indulge in spending.
- Spend less than you earn—Live within your means and put any spare money into your savings.
- Avoid personal debt—Don’t spend what you haven’t got so cut out or cut back on your credit card spending. This doesn’t mean avoiding ‘good debt’ to buy assets like a home or investments.
- Don’t be caught out—Have an emergency fund for unforeseen events and cover yourself with the right insurance.
- Pay yourself first—Deposit a set dollar amount regularly into your savings much like you would pay any other bill.
- Separate your savings from expenses—Do automatic transfers into a savings account to keep your money out of reach of your everyday account.
- Consolidate all your income—Deposit extra income like tax returns, bonuses, gifts, even sales of personal goods into your savings.
- Record and review your habits—Use shopping lists, online diaries or a budgeting app to log what you spend.
- Define short- and long-term goals—Be specific about your saving goals and timeframe. Short term (one or two years) could be a holiday, car or appliances. Long term (five plus years) could be for a home, investments or your retirement.
Source: AMP, originally published on amp.com.au/personal/banking/education/budgeting-saving
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