I don’t think humans were meant to be good at budgeting. It’s just too tempting to spend every cent we earn on stuff we think we need.
It’s only natural, then, that many Kiwis who make a habit of setting New Year’s Resolutions regularly add “be better at managing my money” to the list.
Whether you’re a New Year’s Resolutions kind of person or not, being better with your money is always a good idea. Before that can happen, you first need to know how much you earn versus how much you spend.
The “B” word can be scary but a budget is actually really liberating. List everything you spend money on every month (don’t forget the little things like your monthly contact lenses or dentist plan) then compare your expenses with how much you get paid. At this point you might realise that you need to cut back on how much you spend; you might even have to make some tough decisions (do you really need that gym membership or could going for a run give you what you need?).
Include debt in your budget because you’ll never have full control of your finances if you owe it to someone else. Some people say paying off the big debts should be a priority but I think the opposite is true. It’s always a bit of a morale booster ticking something off, so start with the smaller debts that are easier to cross off the list. Before you know it, you’ll be down to just one debt and even if it’s a biggie it’ll make you feel more in control than having to pay back seven different people.
Don’t forget savings. Set up individual accounts for specific things you want to save for, like a new car or an overseas holiday. You don’t have to save much every payday, just enough to remind you that you’re giving your savings accounts a boost.
Saving for your retirement is important too. Kiwisaver is a no-brainer; it’s practically invisible saving because you never see it in your personal account. If you’ve got any spare cash, explore investment options too. If you have no idea where to start, ask your Neighbourly community for inspiration. You’ll be surprised how many people are keen to share their financial knowledge.
Managing your money isn’t easy, which is why automatic payments are a dream. Automate as much as you can so you don’t have to think about it.
Don’t forget to allow for giving to other people, because even if you’re finding it hard, there’ll always be someone who’s doing it harder than you are. And finally, don’t forget yourself. While you pay off your debts there might not be much spare cash, but putting enough aside just so you can grab a coffee while you walk along the beach on a Saturday morning will make you feel like it’s all worth it.