The road to financial freedom begins with being frugal
Do you lie awake at night worrying about your money? Are your stress levels through the roof because your pile of bills is getting higher and higher? If the answer is yes to either of these questions, then a simple budget can take your stresses away.
Some of you might ask, “What on earth is a budget?” Even more might say, “I don’t need a budget! I know where my money is going.” However, in this day and age, the price of things continues to skyrocket, and before you know it, it may be difficult to keep track of all your outgoing costs.
Creating a working budget for yourself or for your family is essential if you want financial freedom. By taking charge of your money, you can make a big difference to your income and even bring peace of mind to yourself. Won’t it feel wonderful to breathe a bit easier at night?
Five easy steps to creating a budget
Now it’s time to rip off that bandage and make a budget! Here are five easy steps that you can do today to get started!
-
Work out how much your income is: Whether you get paid weekly, fortnightly or even monthly, it’s important to know how much you are getting and when you are getting paid after tax. Once you know this, you then know how much money you have to play with when it comes to paying your bills and other expenses.
-
Make a list of all your expenses and keep it handy: We are such visual creatures that the mere act of writing down what bill needs to be paid, the date due etc, and sticking it somewhere that you see everyday will make a big difference. We are often so busy that things tend to slip our minds so easily. Simply grab a new exercise book (I’m sure you can find these around your home – see, a savings tip already!) and use the pages to write down the following:
-
Bills that need to be paid
-
Their due date
-
Whether you have paid some of these bills in increments
-
Money for groceries
-
Cost of leisure activities, pay TV, and credit cards
Think of anything and everything that you regularly pay.Once you know how much money needs to be put aside for these expenses, pay these things first! Get them out of the way so you don’t accidentally spend your money on a new pair of shoes or a bag, a whole outfit or a night out!
-
Plan for the unexpected: There are always the unexpected expenses that will pop up, such as the washing machine stops working or your car won’t start. Just by putting a little bit of money away for a rainy day can help get you out of these sticky situations. (And you’ll be able to know how much money to set aside, because you would have written your expenses and bills down prior to this step!)
-
Always review your finances: Make sure you review your finances regularly as there could be items you could cut to save you money. For example, take your lunch to work instead of buying it every day. The money saved here could go into a savings account. If you have a green thumb, why not grow your own fruit and vegetable garden in your backyard to eat?
-
Open up a savings account: If you haven’t already done so, open up an additional account within your preferred nominated bank. Make sure it is a savings account and not an everyday account (the former accrues a monthly charge and also has a card attached to the account.) A savings account has no monthly account-keeping fees and no bank card – which gets rid of the temptation to take money out! These accounts will normally give you interest each month if you deposit money regularly without taking it out (Who knew you could get rewarded for saving?) Keep adding to this savings account each time you get paid. Every dollar counts! You will be surprised at how quickly it can add up.
Apply these tips today to create your budget and you can be on your way to financial freedom! I wish you all the success in growing your finances. For more ways to save, visit my next blog: Great ways to save a bit of extra money!