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WHERE DO I START?A budget could be your saving graceSetting a personal budget - and sticking to it - is the first step on the road to long-term financial security. But will it work for you? You’ll never know if you never give it a go! Now is as good a time as any to start living to a budget. After all, the sooner you start, the sooner you can achieve your ultimate financial goals. So... where do you start?
Firstly, you need to know where your money’s going, and how much you can afford to put aside for your future. An accurate budget will help you analyse your spending habits over the course of each week, month and year, and enable you to build up a picture of your total financial ‘health’.
To begin with, you need to identify all your ‘fixed’ and ‘variable’ expenses, such as:
You might find you need to record all your expenditure over a trial period, say a month, to make sure you know exactly how much you’re spending, especially in the ‘discretionary’ areas such as entertainment.
The next step, once you’re sure you’ve tracked your expenses as accurately as possible, is to compare the total with your income from all sources (including interest on investments or savings). The difference will be your surplus or deficit for the year. (Don’t forget, only governments deliberately budget for a deficit!)
Now, if you spend less than you earn, you can put the surplus into longer term savings – but if you spend more than you earn, it’s time to take remedial action. By analysing each area of your budget, you can (hopefully!) identify areas of unnecessary spending – or at least areas where you can cut back. Then you need personal discipline to stick to your new regime, so it’s useful to have some specific medium and longer term goals in mind to keep you motivated.
It sounds easy in theory, but in practice one of the hardest things about budgets is establishing your current levels of income and expenditure. Insight Investment Services has developed a handy, simple budget planner to help clients in this important task. This easy-to-use planner can be obtained by calling our office on 07 3340 3888 (QLD) or 02 6650 5977 (NSW).
If you don’t already have a personal budget, the budget planner may inspire you to achieve greater control over your day-to-day finances and, ultimately, your financial destiny.
Of course, while it is an essential starting point, establishing a budget is just one of the steps in the overall financial planning process. For example, we use the information from my clients’ budget planners to help them set realistic, achievable savings and investment goals, based on their long term financial needs and objectives.
Budgeting and financial planning is all about using what you have today to get where you want to be in the future. If you feel you need some professional assistance, call us or just click below and we will arrange for an Insight Investment Services Adviser to contact you to assist in setting you on the right track.
Happy budgeting!
Click here if you would like an adviser to contact you
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