Going with the Cash Flow
Do you know how much you will earn this month? And more importantly what your expenses are? Two simple questions, but if you can’t come up with a rough answer off the top of your head, you’re making a rookie financial mistake. This means you’re not taking control of your cash flow – and this can end up costing you dearly.
There’s no time like the present to organise your family’s financial planning, and by getting on top of those dull day-to-day transactions that dictate your bank balance, you’ll be amazed to find that your monthly budget will start to run itself. And you will have more time and money to spend on the fun stuff in life.
So grab a pen and paper and write down what you have coming in every month, and list everything you need to pay out.
Better budgeting will save you:
Once you feel on top of your day-to-day finances it’s worth creating a financial roadmap that will help you better navigate a long-term savings plan and build a nest egg for the future.
Here’s a few budgeting tips to help with your plan.
1. Try to work out a plan for the year, listing every essential utility and bill: rent/mortgage, water and electricity, rates, insurance, school fees, work-travel/car costs, etc. Plan your savings for holidays, birthdays, Christmas etc, so you spread the cost over the year.
2. Open several accounts to help keep everything separate – have one for your rent/mortgage, one for your bills, one for your savings and one for your everyday living expenses. You can transfer the relevant funds from your salary every month into your different accounts, then whatever is left in your everyday account is what you have left to spend.
3. Set up direct debits for all your essential bills. Big bills, such as insurance, can be spread throughout the year, to ease the pain – most insurance companies will offer this at no extra cost. If yours doesn’t, it’s time to move.
4. Take a hard look at any debts that could be dragging you down. If you have two or three smaller personal loans and/or credit card debts you will be wasting a small fortune on heavy interest rates. Time to cut your losses and give yourself a clean slate. Talk to your trusted mortgage broker about consolidating them into your home loan. Bank mortgage rates are at a historic low, and are likely to remain that way for the foreseeable future. Not only will this streamline your monthly cash flow, you’ll find your broker may be able to reduce your monthly payments too.
A fear of finances is really just a fear of the unknown. By clearing the decks of all your essential bills each month, you’ll end up with a clear picture of what you have to spend on day-to-day living expenses, such as good, and the luxuries that make the daily grind a little less grinding: Netflix, lattes and the occasional mall-splurge on your plastic.
You’ll be amazed how good this will make you feel.
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