In the current scenario with the inflation and the series of interest rate hikes in Australia by the Reserve Bank of Australia, managing your budget is an important skill that can help you achieve your financial goals. Smart budgeting is the need of the hour, to avoid unnecessary spendings and help in planning your budget effectively. It involves creating a plan for your finances that allows you to prioritize your spending, save for the future, and avoid unnecessary debtand create a budget that allows you to make the most of your money and achieve your financial goals.
Here Are Some Tips to Manage Your Budget:
Track Your Income and Expenses:
The first step is to keep track of your income and expenses. Make a spreadsheet and note down all the income and expenses. Start by figuring out how much money you have coming in each month and how much you’re spending on bills, groceries, and other expenses.
Set Financial Goals:
Decide what you want to achieve, like how much savings you want to have towards buying a home, paying off your debts or building an emergency fund.
Create a Budget:
Creating a budget is a smart practice to meet your financial goals.
Cut Unnecessary Expenses:
Reviewing expenses is recommended to see if there are any unnecessary expenses that can be cut or reduced like a subscription you don’t use or finding more affordable options for things like groceries or clothing or reducing your dining out expenses.
Prioritize Savings:
Set a savings goal and work towards it each month. You could aim to save a certain percentage of your income or a fixed amount.Saving money can be challenging, but with some effort and a few changes to your habits, it can become a habit.
Review and Adjust Budget:
Reviewing and adjusting budget on timely manner is important to ensure that it’s still working for you. If you find that you’re overspending in certain categories, adjust your budget accordingly. Also, be sure to update your budget when your income or expenses change.
Planning for Future:
Consider your long-term financial goals, like saving for retirement or your child’s college education. Make sure you’re allocating a portion of your budget towards these goals.
Pay off Existing Variable Debt.
Many people put off debt towards the bottom of their financial priority list.If you can, make extra repayments towards any credit card debt or loans you have. Paying off your debts sooner can save you thousands in interest. Delaying some debts with variable interest rate can be risky when interest rate rises leading to higher repayments.
If the interest rate on variable debt is low, then it makes more sense on paying off other debts with higher interest like, credit cards or personal loans.
Use Automatic Savings:
Setting up an automated savings account through your bank or your employer can be a smart move towards reaching saving goals.
Shopping around for better deals is a smart way towards your financial saving goals. You can look for better deals for:
Insurance:
Comparing premium with other insurance providers is a smart way to check if you can save some funds.
Electricity:
Compare energy suppliers to make sure you’re getting the best deal. You may use the following websites to compare the best available deals in Australia.
- Government’s www.energymadeeasy.gov.au/website.
- Or www.compare.energy.vic.gov.au/ if you’re in Victoria.
Internet & Phone:
Reviewing monthly usage over a period of 12 months period and changing your phone and Internet plans that suits your need is another smart move towards smart budgeting. You may not evenrealise that you could be paying more than you use or that there may be cheaper options. Your current provider could also offer you an incentive or retention plan to stay with them, which may be a better deal.
Higher interest rates are undoubtedly challenging, but careful plannings, smart financial decisions, and willingness to be flexible and adapt to changing circumstancesis the best way to survive high interest rates.
By Nitishikha Gogoi Bhuyan