People who go through life never worrying about money can do so because they have sound investments, which began as savings. Those of us who go through our money month to month, on the other hand, and who often end up with a bit more month than money, have trouble with the savings part.
So, here is the low-down on how you go about creating a monthly budget and sticking to it, until you have some savings to turn into investments.
Write It All Down
To start with, you need to work out exactly how much money you have coming in, and what you are spending it on. So, write everything down: a list of all your income streams, and a list of all your expenses.
If the second total is higher than the first, you immediately know where you have work to do: either raising your revenue stream, or more realistically, cutting your expenses.
Tackle Debt First
If your expenses outweigh your income, resist going into debt unless there is absolutely no other option. It may bring temporary relief, but if you can’t pay your expenses with your existing income, how will you pay a debt plus the interest?
Instead, cut expenses. Once you are budgeting correctly, pay off debt immediately after buying basic necessities, and before spending on anything else. If you land a win playing NZ slots for real money, make sure you put the winnings to good use and settle any lingering debts.
Cut Unnecessary Expenditure
To have extra cash and pay off debt, however, first you must get spending under control. If you were spending more than you earn, you need to economise. For a start, check you do not have any online or mobile subscriptions that you never use, but nevertheless get charged for every month: cancel those.
Take-away meals and coffees should be off the menu, and so should alcohol and too much socialising or attending carnivals and other events. Once you can afford your monthly expenses, with no debts and enough of your income left over to save regularly, you can use whatever is left to entertain yourself and others.
Stop Smoking
Not just an unnecessary expenditure, but one that has terrible consequences for your health, too. Nicotine addiction is a hard habit to break, but you owe it to yourself. Money wasted on tobacco and sin taxes should instead be going into your savings to make your life better.
Pay Yourself First
Once you have cut down all unnecessary expenses including tobacco, you should have reached your goal and some income left over to save. Create a specific account, preferably 7-day or 30-day notice, and then set a debit order that pays a regular amount from your current account into your savings every month.
Paying yourself first accomplished two things: firstly, you give your savings and investment plan the respect it deserves; you give yourself the respect you deserve, by looking after your money better.
Secondly, if you use a debit order and the savings instalment disappears from your current account as soon as your monthly income gets paid in, you never miss it. Saving simply becomes a habit; the first slice of any money you receive goes straight to your savings, where your investment quietly grows.
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