Budgeting advice to make your money work for you
Whatever age or stage you are in life, you need a budget to help you plan how you spend the money you receive. It is one of the best tools to help you achieve your goals.
Financial problems have a negative impact on family life. They cause stress and anxiety, and may even result in family conflicts and violence.
Most vulnerable families are in precarious financial positions because they have debts to multiple creditors. Financial stability is critical to the wellbeing of all New Zealanders. This is why budget services have been set up to give families the tools and information they need to manage their financial affairs prudently.
Who should have a budget?
Everyone needs money help. Some people think that budgeting advice is for people who are struggling financially but this is a misconception. Even the rich seek budgeting help.
If the money you get is more than what you spend, use a budget to calculate how much money you will be putting aside every month so as to improve your financial standing. On the other hand, if your expenses are more than your income, a budget will give you a better idea of where your money is going. See if there is a way you can reduce your spending or increase your earnings.
How do you make a budget?
Calculate how much money is coming into your home (income), and how much is leaving or going out (spending), then find the difference. The result is that you will either have some extra money (surplus) or hardly any money left to take care of your expenses (deficit). Aim for a surplus so that you’ll have enough money to put aside for future projects, or to pay off debts in time.
What you need for a reliable budget
For your budget to be accurate, you’ll need to spend some time gathering all the necessary information, including:
- A record of your daily spending. Keep your shopping receipts in a safe place, and fetch your bank statements and bills from the last 3 months. These will provide a good account of your regular expenses such as rent, phone bills, insurance and power.
- A list of annual costs. These are the payments that you make less regularly such as medical expenses, holidays and getaways, gifts and vehicle licensing.
- Your income details. This is a list of all the moneys that come in such as your salary, NZ Super or interest accrued on savings.
Tracking your spending
Now once your budget is set, you need to see if it is really working. Maintain a spending diary or make use of an online tool. A budget will help you to plan your money, but it is also crucial that you know exactly where your money goes. Make sure you know how your money comes in and how it goes out, this will be essential for you to sort out your finances.
Money tracking tools will tell you if you are overspending, whether it is pay-to-pay or week-to-week. There are many online tools and apps for this, it’s usually a good idea to find something specific to New Zealand.
Make the most of your income
Budgeting isn’t only getting a grip on your spending; your level of income will also determine if you have extra money to save or to pay your debts. It is important that your income grows, otherwise you will be effectively be earning less annually because of inflation.
With this financial advice, you will find it easier to keep up with your bills, indulge in occasional luxuries and pay off your debts faster. So start keeping a budget today and you will reap the fruits in due time. If you need help with your budgeting contact the friendly NZCU South team on 0800 865636.