5 Budgeting tips that actually work
Are you sick of searching the internet for money saving tips only to find the same old advice like ‘don’t buy coffee’ and ‘take your lunch to work’. While these tips do help, there is more to budgeting. That’s why we have come up with these 5 budgeting tips that actually work.
1. Buy based on quality, not price
Buying the cheapest option rather than the best quality is a trap that so many people fall into when trying to save money. It might seem like you are saving money up front, but in the long run there is a good chance it will end up costing you more. Often buying a more expensive, better quality product will save you money as the product is more likely to last much longer than a cheaper version, not to mention it has more chance of doing a better job. Buying the cheaper version could mean you are replacing the product more often, which doesn’t make good financial sense.
2. Make sure your money is always working hard for you
Always make sure your money is working as hard as it possibly can be, which means you need to avoid having large amounts of money sitting in low interest transaction accounts. If you have a mortgage with an attached offset account or free redraw facility, park all of your savings here, and redraw them as needed. Otherwise, find the online savings account with the highest interest rate and use it as much as possible. Through the power of compound interest small amounts of money can end up being large sums of money in the long term.
3. Everyone needs a budget
You might think you earn enough, or are so good at managing your own money that you don’t need a budget. That’s just not true, everyone needs a budget! Having a budget means you have a goal, and you have a plan to reach that goal. It’s impossible to seriously save if you don’t have a plan to tell your money where you want it to go.
4. Keep your expenses the same as your income increases
This is one of the biggest traps people fall into as they work their way up in their chosen career and start to get pay increases. It’s extremely easy to match your level of spending to your level of income, which is why some people can earn hundreds of thousands of dollars each year and still be living week to week. It’s important to have this in the back of your mind whenever you get a pay rise.
As soon as your pay increases, make a plan to put that extra income aside as soon as it hits your bank account. If you think you won’t be able to avoid temptation to spend your new income, set up an automatic transfer. You will soon forget about the money, and end up with a nice savings account balance before long.
5. Become fantastic at cooking
Food is one of the biggest expenses in anyone’s budget, and even though we all like a break from cooking, the cost of eating out adds up fast. Once of the best ways you can free up cash in your budget is to cook your own meals, and the better you get at cooking, the more you will enjoy your meals and feel less of a need to eat out. If you start to feel as though you are eating the same thing week after week, choose a night of the week, and make an effort on that night every week to cook something new. Head to the library to pick up some cookbooks, or browse our fast growing list of budget recipes for inspiration.