Using a home budget to boost your savings
3 December 2018
Managing a household with a lot of different expenses can be a challenge. It doesn’t matter if you’re living alone, with a partner, or have a few kids in the mix, there’s a lot to keep track of. We’ve all been there: the bills arrive on the same day you need to get your car tyres changed; or your daughter needs her school books right when it’s time to pay your life insurance premium.
With so many things competing for your attention, setting up a home budget can help you stay on top of your expenses. It will also allow you to set some savings goals for the future and start planning ahead.
To get you started, we’ve put together a few tips on budgeting and some ideas on how you can save money. Spoiler alert: they’re all things you can start doing today!
Setting up a budget might feel a little daunting, but essentially it’s the relationship between your income and expenses. A budget will take into account how much you earn and every aspect of your spending, so there’s a little bit of prep work to do initially.
Understand the goal of a budget
The goal of any budget is to get a clear picture of your finances. A budget can help you identify your spending, then find areas where you might be able to cut back and divert income elsewhere, like into a savings account for example.
Ideally, you want to be spending less than you earn, so it’s helpful if your budget is set up with that goal in mind.
Make a list of your regular payments
This can be anything, from rent or rates to recurring bills, with a fixed amount that you have to pay regularly. Having a list of these expenses in front of you will form the foundation of your home budget.
Track your expenses
Next, spend a week tracking your expenses. You could write them down, or use an app or digital planner, such as Suncorp’s free online Budget Planner. This can do the calculations for you – once you plug in your information.
Have you tried the 50/30/20 approach?
This popular way of budgeting breaks things down into three areas: 50% of what you earn goes to your fixed expenses (necessities), while 30% is for things you want (eating out, shopping, etc.), and the remaining 20% is savings. This approach is a good place to start if you’re unsure of how much money to allocate to the different parts of your budget as it’s pretty straightforward.
Bucket your money
This is a recent concept that has helped many Australians manage their money. Bucketing your money means dividing your funds into various ‘buckets’, instead of having your money in one big pile in your bank account.
What bucketing lets you do is separate your money and allocate it to different things that are important to you. You can use this approach to create a budget that’s personalised and based on what you spend.
Plan better with an Everyday Options account
If you’re interested in managing your money in this way, you could try the Suncorp Everyday Options account. In your account you can have up to 9 separate sub-accounts that you can name whatever you like. You might like to call one sub-account ‘rent’ and another ‘groceries’ – or even name one ‘holiday fund’! You can shuffle your money between accounts and it won’t attract any extra fees.
How to save money
Part of your budget should include a portion of money you’re going to save. It doesn’t have to be a huge amount – even a few dollars set aside every week will help – and there are a lot of simple ways to save money on other things, such as utilities, clothing and groceries.
Start with one habit
Changing spending habits can be scary and it does take time. Start with just one habit, like buying one less coffee each week, and see how you go. Once you build a bit of confidence, you can tackle bigger savings goals!
Create an emergency fund
It can be handy to have an emergency fund for when those unexpected expenses arrive (which they often do at inconvenient times). In a similar way to your savings, you might like to create a bucket in your bank account – or set up a separate bank account – dedicated to emergencies.
Set some short-term goals
You might have some lingering debt to pay off, or would like to save up for a holiday in Thailand – setting up a few short-term goals is a great way to kick start your savings habit. Make them small initially, then you can increase them as you go.
Get to know your spending habits
Regularly reviewing how you spend your money is a great way to make sure your savings goals are realistic. You might have less money for savings at different times during the year, so it’s important that you make room for these kinds of changes.
Get an accountability buddy!
It’s often easier to get to the gym if your best friend is meeting you there, and this idea can be applied to how you save money. Get together with someone you trust, start a conversation about money and become each other’s accountability buddy. That way you have someone to check in on you and see what progress you’re making to your goals!
Budgeting is a skill that can be learned – the more you practice, the better you’ll get at knowing how to manage your money for what you want and need.
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Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product.